Bank of America's Secret to Success: America's Bank Dicks America, Cleans Up in Return
Pic credit: David Dees
Oh dear. Really, Bank of America? Really?!
Bank of America Corp.'s shotgun marriage to Merrill Lynch & Co. has produced plenty of ill will, and big profits in real-estate investment banking.
The Charlotte, N.C., bank blew away the competition last year in the business of underwriting stock offerings by commercial real-estate firms. The secret of success: Bank of America leveraged its relationships with real-estate borrowers to generate a flood of investment-banking work, much of it handled by former Merrill bankers who decided to stick around after the securities firm was acquired last year.
Bank of America hopes to repeat its success by dominating what is expected to be one of the biggest businesses in real estate this year: helping troubled private companies tap the public markets. Many expect a rash of initial public offerings by private companies comparable to the one that followed the commercial real-estate collapse of the early 1990s, with large payoffs for underwriters.
"We have lists of companies that we think are good candidates for the public market, and we're proactively reaching out to them," said Jeffrey Horowitz, who heads real-estate investment banking in the Americas for Bank of America. In IPOs of real-estate companies, Bank of America's capacity to issue debt commitments will matter as well, Mr. Horowitz said, because company executives will look for underwriters who also can provide a credit line that will allow the company to expand.
Now maybe this is just me but if I were in charge of Bank of America I would A) keep this shit on the down low and B) focus my efforts on keeping the unwashed masses happy with my ass. Again, perhaps I'm just totally whacked out and have no idea what I'm talking about.
It is painfully obvious here that BofA has no clue into which sort of shark-infested waters it is treading but that shouldn't come as too much of a surprise as we've certainly seen that scenario play out at least once before.
Come on, BofA, didn't you learn your lesson the first time around? Of course not, fuck it, let's just go with the riskiest venture possible in the name of profitability! Who cares! It's not like Obama is going to let you bastards fail!
It's cool. Nothing to worry about. Everything is under control.
HuffPo (May 2009):
[T]he most dangerous time for banks will be 2010 to 2013 when $1 trillion in commercial real estate loans will mature and -- like homeowners before them -- owners of commercial properties will need to refinance.
Blumberg estimates that $236 billion in commercial real estate loans that were turned into securities will need to be refinanced in this period and that $67 billion of that amount "will be lost."
"We are on the brink of one of the worst commercial real estate financing markets ever," he said.
Duck, you sons of bitches.
Like I said, nothing to worry about. The bailout hose is at the ready and so long as the Treasury has the Fed serving as handmaiden to its whims, we can pretty much keep this up forever.
And by forever I mean the next few months.