The bank now has 16,000 employees in Socal, several thousand of those working at its Calabasas-based mortgage division (the remnants of mortgage-lending giant Countrywide Financial). Not that B of A is reaping many benefits from 2008's ill-advised purchase - New York's attorney general is moving to block an $8.5 billion settlement between Bank of America and its investors in connection with mortgage securities that plunged in value during the financial crisis. All told, B of A has lost billions of dollars as a result of Countrywide's mismanagement - and there's no end in sight. In the August issue of Los Angeles magazine, I take a look at the Countrywide acquisition and its ugly aftermath.
Mortgage operations are located in a gated Mediterranean-style office complex off the Ventura Freeway, formerly the headquarters of Countrywide (and before that, Lockheed). The place has the look of an exclusive club, with a guard stationed in front and only a small plaque to indicate that it's a Bank of America office. I found the same restraint at the much larger BofA compound in Simi Valley, where thousands of employees take calls from often desperate mortgage holders hoping to prevent foreclosure. After driving up a narrow road, I turned onto 450 American Way, where dozens of people with badges around their necks were walking in and out of the massive two-story building that once served as a warehouse for Bugle Boy jeans. I tried approaching a couple of folks, but they had been instructed to avoid reporters. When I got back in my car and pulled into a visitors' parking space, a young man in a blazer and earpiece came up to me to ask what I was doing there. Leaving, I noticed he was speaking into his shirtsleeve, which was most likely hiding a transmission device.
Countrywide, you see, remains a sore subject. Current CEO Brian Moynihan couldn't escape shareholder grousing during the company's annual meeting last May ("I can't revisit that decision," he told the Financial Times. "I have to figure out what to do with the company now.") At the bank's headquarters in Charlotte bad news often gets telegraphed with a single word: "Calabasas." To be fair, the current Calabasas executives didn't orchestrate the Countrywide purchase (Kenneth Lewis left the bank under fire in late 2009). In fact, the BofA executives charged with untangling the mortgage problems "have been accessible and willing to listen and made a decent effort of reaching out to stakeholders," says Barry Zigas, director of housing policy for the Consumer Federation of America. "But it's just been a very difficult process."
When I spoke to [Barbara] Desoer, president of Bank of America Home Loans and a longtime BofA executive, she seemed determined to avoid linking the bank's mortgage woes with the Countrywide acquisition. What she did say was something only a corporate manager could love: that the loan problems presented "a wonderful development opportunity" for employees because it allowed them to get experience in default servicing. This is no doubt true, though it's a little like saying that being stuck at the bottom of a mine shaft provides experience in self-sufficiency. Still, Desoer noted many service improvements, including tighter lending practices and easier access to customer representatives. Paperwork isn't being lost as much, either. "We're in a good place relative to meeting the needs of the customers," she said.