B of A spent many weeks/months looking at Countrywide's assets when they lent them the first monies. They also looked at them again before agreeing to purchase them.
The B of A people are not dumb. They discounted the mortgage assets a great deal-- maybe to 30 cents on the dollar. You can absorb a lot of defaults, reselling the foreclosures at 40% of face and still make money.
That's a very good point. To Yankees charge on stem cell research, why don't we try to identify financials best positioned to rebound from here. There are many things that were written down to mark to market but may have a much higher realizable value. Did this a long time ago with Americredit. Performed an analysis based on their portfolio and determined things weren't as bad as they seemed and made a ton their over the course of a year.