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The risk breaker

To claw its way back from its problem-loan nadir in the late 1990s, Bank of America embraced risk-adjusted return metrics and credit risk distribution techniques. Amy Brinkley is overseeing its turnaround.

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Bank of America’s 1998 merger with NationsBank resulted in a financial colossus with massive, often overlapping lines of credit to US corporations. Soon after the $62 billion merger, some of the the combined entity’s corporate credit exposures became a threat. Defaults caused the bank’s nonperforming loans to spike, and its share price dived – sliding from a high of $78 in June 1998 to a low

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The wild world of credit models

The Covid-19 pandemic has induced a kind of schizophrenia in loan-loss models. When the pandemic hit, banks overprovisioned for credit losses on the assumption that the economy would head south. But when government stimulus packages put wads of cash in…

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