Lol. This is what happens when you sign off a bunch of loans and people stop paying. Debt is both a good and bad thing. In good times, you are euphoric and in bad times, you are down in the gutters.
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Well it was a really ironic situation.
The bank was a local one and was doing all the crazy shit other banks were doing during the real estate boom. After all if you dont someone else will.
He was concerned about the bad loans but the bank was protected, they were selling the loans and getting them off the balance sheet. Thus they were protected since they made money on the transactions, got fees for servicing the loan, but the loan itself went to Wall Street.
Of course, they were exposing themselves in the back end by buying MBS from...Wall Street.
Who knows, maybe they bought pieces of their own loans back.
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The bank didnt get any TARP money so the Feds had to step in. The assets were sold (given) to TDBank, the deposits were covered by FDIC, the FED took the MBS (which are still likely on their balance sheet) and the shareholders like my buddy suffered a total loss of their stock.
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