Geitner's latest gift to the banks... Stealth bailout of Bank of America

[taught_me_patience]

Is there any doubt he is in the back pockets of the banks? This entire administration is in the back pocket of banksters and it's absolutely sickening.



BofA Freddie Mac Putbacks Resolved for 1¢ on $
By Barry Ritholtz - January 4th, 2011, 7:20AM Bank of America settled numerous claims with Fannie Mae for an astonishingly cheap rate, according to a Bloomberg report.

A premium of $1.28 billion was paid to Freddie Mac to resolve $1 billion in claims currently outstanding. But the kicker is that the deal also covers potential future claims on $127 billion in loans sold by Countrywide through 2008. That amounts to 1 cent on the dollar to Freddie Mac.

Imagine if you had a $500,000 mortgage, and you got to settle it for $5,000 — that is the deal B of A appears to have gottem from Freddie Mac.

B of A also paid $1.52 billion to Fannie Mae to resolve disputes on $3.1 billion in loans (~49 cents on the dollar). They remain liable for $2.1 billion in repurchase requests, as well as any future demands from Fannie Mae.


more:
http://www.ritholtz.com/blog/2011/01/bofa-putbacks-freddie-mac/

[Jackpine Radical]

1. You just don't understand banking.

The Adminstration had to go along with this because…uh…

It would be disastrous if B of A went down.

They're too big to fail. That's the ticket--too big to fail.

[Capitalocracy]

2. I think if all those banks went down

it would probably be the best thing that happened to this country since the Emancipation Proclamation.

[Octafish]

3. That's what John Kenneth Galbraith said...

"The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it. The process by which banks create money is so simple the mind is repelled. With something so important, a deeper mystery seems only decent."

More on The Fed from Economy Watch

I wonder if WikiLeaks has something on this?

[Jackpine Radical]

5. That's a great link. Thanks.

I've bookmarked it & emailed it around a little.

[lonestarnot]

9. K & Ring for this link!

Thanks Octafish!

[kentuck]

10. Good read.

Thanks!

[On the Road]

4. They Did Not Settle for One Cent on the Dollar

$127B is not the amount of the future claims, it is the amount of the loans sold by BoA to Freddie Mac.

The amount that would be paid in claims would be based on:

-- The fraction of those loans that went bad
-- The proportion of those losses that were above and beyond long-term averages
-- The losses on those bad loans (subtracting the amount recovered in the foreclosure process)
-- The fraction of the losses due to BoA misconduct rather than general economic conditions.

For example:

-- 4% foreclosures (http://j.mp/hy6uWh)
-- 2 percentage points higher than long-term average
-- 50% loss per foreclosure
-- 50% due to BoA misconduct

That would result in $127B * 4% * 50% * 50% * 50% = $0.6B

That would mean that BoA overpaid, so some of those illustrative numbers are probably too low. Based on how the market reacted, it may have been a favorable deal, but it's nothing like how that blog represents it.

[Fiendish Thingy]

6. k&r n/t

[mdmc]

7. ..

[kentuck]

8. Sounds like a good deal to me...

Let the taxpayers pay for it.

[lonestarnot]

11. "monetary system we live with is designed for our subjugation"

http://www.economywatch.com/economy-business-and-finance-news/the-federal-reserve-is-a-private-bank-20-11.html

[Edweird]

12. I would be ok with all BOA branches razed to the ground and their executive's heads on pikes.

But that's just me.

[lonestarnot]

13. kick

[sarcasmo]

14. Mega bank and mega corporation America. USA, USA, USA.