Aided and abetted by Secretary of the Treasury Tim Geithner.
The news from the NY Times:
Bank of America announced on Monday that it would take a $2 billion charge to settle claims with Freddie Mac and Fannie Mae.
The agreements center on loans that Countrywide Financial sold to the two government-controlled entities.
Wow! A $2 billion hit - what did the stock do?
UP 6.37% today.
Why?
Because the real losses were estimated to be far, far higher. Over the past couple of months I've read these losses might have been in the tens of billions of dollars. Nothing like settling for pennies on the dollar.
All the millions of home owners upside down on their mortgages would love to settle for pennies on the dollar. Tough shit for those homeowners.
One of the best bank analysts out there Christopher Whalen was just on CNBC calling this 'a gift' to Bank of America from the Treasury.
Here's Wahlen on his blog:
The corrupt relationship between the large TBTF banks and the federal government is long-standing and should be the focus of people on all points of the political compass.
Look at the just announced settlement between Fannie and Freddie and Bank of America, where the government-sponsored enterprises (GSEs) now controlled by the Obama Administration are providing what appears to be a huge subsidy to Bank of America to the tune of tens of billions of dollars. If you look at the most recent quarterly earnings disclosure to the SEC from Bank of America on future losses from the GSEs, then look at today’s settlement with the GSEs, which was approved by the Geithner Treasury, and it is hard not to conclude that the settlement was a gift.
The losses hitting Fannie and Freddie will be borne by the American taxpayer and not the bond holders of Bank of America. The single digit billions BofA paid to Fannie and Freddie is less than a quarter of my firm’s estimate of such losses prior to the announcement. And our estimates were by no means the highest.
http://blogs.reuters.com/...
Once gain aided by Geithner and this administration we are screwed by the banksters. Billions of dollars of losses added to the national debt.
Blogger Karl Denniger asks:
How much money is the taxpayer on the hook for as a consequence of this arguably unlawful allocation of Federal (that is, tax) money from the government to BAC on a "present value" or even "reasonably-foreseeable loss" basis - without a bill originating in The House?
http://market-ticker.org/...
Wahlen asks:
How can bankers like JPMorgan Chase CEO Jaime Dimon, who settled his own tab with Fannie and Freddie on equally attractive terms last year, complain about Barack Obama when the supposedly liberal President is so generous with public subsidies for the zombie banks?
So Turbo Timmy lets BAC off the hook and the Obama Justice Department seems to have no interest investigating the fraud behind these loans. And it's bankster fraud on a massive scale.
Meanwhile the Republicans take charge in the House and will be looking to blame the mortgage/housing meltdown on Fannie and Freddie.