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Pressure rises on holdout banks as Wells settles with FHFA

  • The price tag - obscured by a confidentiality agreement - is believed to less than $1B, reports the FT (a far cry from JPM's $5.1B settlement). Wells (WFC -0.4%) was the only large U.S. bank to not be named when the FHFA filed suit against 17 lenders in 2011 - apparently because it had already entered into settlement discussions with the GSE regulator.
  • In addition to the Bank of Dimon's settlement last week, Ally Financial reports it expects to soon reach a deal, and HSBC boosted reserves - a sign a settlement is nearing.
  • This ramps up the pressure on holdouts like Bank of America (BAC -0.9%), RBS, Deutsche Bank (DB -0.7%), and Credit Suisse (CS -0.4%) - all of which have large exposure to FHFA cases - to cut their own deals. Extrapolating the JPMorgan settlement leads to a range of payments of $1.7B to $7B for these four lenders, says the FT, which has reported the FHFA is pressing BofA for more than $6B.
Comments (5)
  • mphill47
    , contributor
    Comments (534) | Send Message
     
    All I can say is "when are the real culprits going to be nailed, the executives for the former Countrywide Mtg." ??
    31 Oct 2013, 05:14 PM Reply Like
  • eager1
    , contributor
    Comments (122) | Send Message
     
    No. The real culprits are the politicians that created Fannie Mae & Freddy Mac? Why is the government in the home loan business? Ans. Because we are becoming a socialist society.
    31 Oct 2013, 08:33 PM Reply Like
  • vireoman
    , contributor
    Comments (966) | Send Message
     
    As with so many govt-sponsored enterprises, the programs had their origins in good intentions, and then began the inevitable bastardization. Contrary to whatever sources have your ear (Rush?), Fannie Mae began in 1938 in an attempt to boost lending and home ownership in the aftermath of the Great Depression (hardly a nefarious plot on behalf of the govt at that time). Freddie Mac began in 1970 as an attempt to mitigate the monopoly of Fannie Mae. Did they serve a useful function in the past decade? Hell, no. But it had nothing to do with "socialism."
    1 Nov 2013, 02:29 AM Reply Like
  • Phr3d
    , contributor
    Comments (236) | Send Message
     
    agreed, vireoman - press needs a name-to-blame and banks and Freddie/Fannie are easy for the readership to identify.
    The culprits are politicos, litigators that we have thankfully forgotten, but whose names are legion in the go-to books, after having successfully trashed the likes of Phillip-Morris et al.
    The suits claim-to-fame is that the costs must be borne by the firm in Hopes of success against obvious wrong-doing.
    It has become such a Product that the guv'm't now does it ROUTINELY, as their pockets and patience are limitless and settlement is the defendant's ONLY recourse.
    Imagine if it were lonely old YOU at the receiving end. The common belief is that corporations have endless money for litigation, but it must at least be Paid For, through loss of EPS.
    There are no investors questioning the appropriateness of litigation in state and federal guv'm't. There is no (apparent) check and balance There at all. State AG wants to be Fed AG? sue the shyt outa' ***, Inc., they're not understood nor remotely popular anyway. If you can scare them into settlement, you can press-release yourself as a hero and move into a nicer office.
    Initial pay is crap, but power equals lifetime pay, see how many in DC power have financial difficulties of any kind.
    I'm guessing that Medicaid is next in line for settlement due to damages caused by those bad ol' banks.. these poor people's mental health was damaged by TBTF bank practices, and Medicaid had to foot the bill for their mental rehabilitation.. hmm.. 911 people X 6 visits each seems to come to a bit over $1.1B.. when can we expect the check?
    .
    and when.. OH When? can we expect to see Wells-Fargo step up to the plate and IMAGINITIVELY sue the begeezus outa' the scoundrels that keep thinking this useless shy.. erhm.. stuff up?
    1 Nov 2013, 03:53 AM Reply Like
  • eager1
    , contributor
    Comments (122) | Send Message
     
    vireoman, Fanne Mae began in 1938 as a result of the dust bowl. Zillions of farmers simply walked off their property and the government had to create a department to process all the vacant land. They also helped with loans to the very needy so they could keep their farms. Never was it intended to become what it (and Freddy Mac) are today.

     

    Interesting article here: http://bit.ly/1f8pPEL

     

    It is basically a example of what happens when you allow government to become a big direct player in the commercial marketplace. We are witnessing that in Obamacare as we speak.
    1 Nov 2013, 12:27 PM Reply Like
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