When does a big loan go bad?
Bank of America has made headlines again after the Federal Reserve and the U.S. Treasury announced that they had agreed to review the bank’s financial health.
The announcement was welcomed by the financial industry, which has been critical of the bank and its handling of the housing bubble.
But the Fed announcement also triggered a new round of criticism, as investors increasingly view the bank as a “pioneer” of high-frequency trading and the role of big banks in the financial crisis.
As part of the review, the Federal Open Market Committee is expected to release a final assessment on the bank in the next few weeks.
However, analysts say the Fed’s announcement could be an opportunity for the bank to be able to correct a lot of the problems it has created and is still trying to fix.
The Fed’s review comes as the bank is trying to avoid the kind of losses it saw in the housing market.
“The Fed will continue to be looking at the financial health of the Federal Deposit Insurance Corporation, the largest commercial bank in North America,” a Bank of Canada spokesman told Reuters in an email.
In addition to the financial reviews, the Fed will also look at other institutions that could be affected by the mortgage crisis, such as the banks that helped create the mortgage market, such Asana and Equifax, which both reported losses in the first quarter.
A central bank statement this week said the bank was taking a series of actions to help the U-verse and others like it avoid losses from the mortgage meltdown.
A senior bank executive told Reuters that while the Fed review is not the end of the game, it could provide a framework for a better way forward.
“It will help to give the Fed the tools they need to look at what happened in the mortgage marketplace,” the executive said.
For now, the bank has a lot to work on.
There is no definitive answer as to when a bank will be able, if ever, to make a profit.
A large bank may make a large profit, but this is not guaranteed.
Bank of America stock was down almost 1 percent at $50.96.
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