– If the financial crisis in 2008 primarily impacted investment banks, why did Bank of America stock fall way more than Goldman Sachs (as an example)?

Question

If the big investment banks were the ones betting wildly on mortgage backed securities and the insurance on them, how did some investment banks come out largely unscathed while Bank of America stock STILL is lower today than it was in 2007?

In: 8

Answer 1

The big concern at the time was exposure to retail banking, which BofA had a lot of exposure to while Goldman does not since they worked in corporate banking and capital markets.

The concern at the time was that consumers were living off credit cards and low interest rates and if rates went up those people wouldn’t have the cash flow to cover their debts and all the retail banks they held the debt wouldn’t be able to collect payments.