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BofA (BAC +4.4%) settles with Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) over housing loans...

BofA (BAC +4.4%) settles with Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) over housing loans sold to them by former Countrywide Financial. As a result, BofA will record a $2B impairment and take a $3B provision related to repurchase obligations (PR)
Comments (5)
  • bbro
    , contributor
    Comments (9327) | Send Message
     
    This is a big deal....the Compass report which started a lot of the fears
    had a potental worst case for BAC with the GSE's at 21.8 billion...
    even Credit Suisse worst case for the GSE's was 13.7 billion.....I had
    calculated 6 billion worst case...looks like it will be around 3 billion...
    3 Jan 2011, 07:47 AM Reply Like
  • Tony Petroski
    , contributor
    Comments (6373) | Send Message
     
    There's an Alice-in-Wonderland feel to this "settlement." Fannie and Freddie, "private" companies that everyone knew were arms of the government, became, well, arms of the government. BAC purchases Countrywide with the worst timing since the knockoff Timex I bought in Hong Kong while Countrywide has friends in the government including powerful chairmen of banking committees.

     

    The government approves the sale of Countrywide thus making BAC even more too big to fail. Then in a panic, ex employees of other too-big-to-fail financial institutions create the conditions that led to TARP, the takeover of Fannie and Freddie and the nationalization of large parts of the economy.

     

    Now, one arm of the government is approving a settlement going to another arm of the government all being paid by what is now (BAC) what Freddie and Fannie were before--a virtual arm of the government.

     

    Meantime the ex-government administrators and ex-powerful members of the government move in and out of the quaisi-government institutions as well as make handsome livings lobbying the government on behalf of other government institutions.

     

    Who says innovation is dead in America?
    3 Jan 2011, 08:59 AM Reply Like
  • The Geoffster
    , contributor
    Comments (4010) | Send Message
     
    "Who says innovation is dead in America?"
    Tony: It looks like we're borrowing a page from China's handbook.
    3 Jan 2011, 09:29 AM Reply Like
  • Jim Nelson
    , contributor
    Comments (78) | Send Message
     
    Looks like a lot of bearish commentators predicting billions and billions of dollars out of BAC coffers to settle MBS cried "WOLF" again. Too bad lots of investors read this bunk and lose their money on "Wolf Cries" from these sources trying to create "spectacular" news events out of nothing.
    3 Jan 2011, 09:16 AM Reply Like
  • The Geoffster
    , contributor
    Comments (4010) | Send Message
     
    The settlement with a corrupt government agency (pardon the redundancy) may be nothing more than an attempt to lower the settlement bid of all those private entities who were fleeced.
    3 Jan 2011, 09:32 AM Reply Like
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