Tuesday, January 4, 2011

Geithner Lets Bank of America Off The Hook For 1 Cent On The Dollar

The potential liability of $127 billion in mortgages sold by Countrywide, which collapsed and then was bailed out by BAC in a smokey back room deal which involved the U.S. Treasury, was just settled in BAC's favor for 1 cent per dollar of potential Taxpayer liablity.  These were loans which were flipped into Fannie Mae, which is now owned by the Treasury/Taxpayer.  Here's the link:  LINK Mr. Ritholtz makes an interesting quote:  "My biggest complaint about the GSEs post government takeover is that they have been used as a back door bailout of the banks. This latest deal reconfirms that view."

Interestingly, this was a prediction I made back in 2002:  The Government would eventually take over FNM/FRE and use them monetize the mortgage/housing collapse.  We are there.  Make no mistake, there will be QE3, 4, 5 and the precious metals will eventually hit pricing levels, in U.S. dollars, which will shock people.

Please note for the record:  the media/blogosphere keeps referring to this deal as being between Bank of America and Fannie Mae.  Unequivocally, this deal is 100% between Tim Geithner as agent for the U.S. taxpayer and Bank of America.  Period.  This is because the Govt/Taxpayer owns FNM.

The more I ponder this deal, the more I believe there is a great case for fraudulent conveyance:  from BAC to the Govt AND from the Govt/Tim Geithner to the Taxpayer.  I hope someone pursues this.


  1. Dave, you are right on the money (pun fully intended!). Jim Willie and Max Keiser has been making the very same points as you. There is fraud and corruption up the yazoo. Let's hope these bums are put on trial and imprisoned for their crimes against the nation.

  2. As frustrated and angry as we all are (Karl Denninger also hammers on this issue repeatedly) about this ongoing criminal behavior, nothing will ever be done about it because, make no mistake, the criminals are in charge.

  3. LOL. Sam, I've accepted that it is what it is and there's nothing to be done about. It's the human condition - fait accompli. I'm starting to think that maybe southern Italy or Sicily would be good places to move to in order to duck the chaos. Those people have seen everything come and go and have lived to tell the stories!!

  4. I don't know about Italy, Dave. Being one of the PIIGS, they aren't in the best of shape either - although your point about their still being here is a good one! ;)

  5. It's not about economic stability. The U.S. is in far worse shape than the PIIGS combined. It's about living in a place where people have a history of survival. I also believe that southern Italy will somewhat left alone.

  6. Can't argue with that logic. I wish you luck. :)

  7. Thank Dave and Sam I absolutely agree that the inmates are running the asylum. Keep some of your assets outside the US as well as some PM's and have a reliable escape plan and nothing these criminals can touch. As the late great George Carlin said "they want it all and now they are coming for your social security and you know what? They will get it."

  8. Bonjour Dave et bonne année.
    je lis avec beaucoup de plaisir le blog ainsi que les commentaires.
    Je peux me permettre de vous recommander le sud-ouest de la France et en particulier le département du Gers .
    La nourriture y est bonne, il n'y a pas de pollution.

    Bien cordialement

  9. Bonjour Pierre. I understand very little French. Capisco e parlo un po' l'italiano.

    I agree with you about southern France as another possible place to go to duck the flak. A colleague of mine and I have talked about that since 2002. But since I'm learning Italian, I figure southern Italy would convenient.

    At this point I'm open to any ideas!

  10. I'm heading to my grandparents' home towns in Sicily this September so I'll keep you posted on what I find :). Anchio parlo L'Italiano (un po). Vorrei parlare L'Iltaliano quando vedero Sicily. (I hope that's right)

  11. The only thing I think that is wrong is "vedero." The 2nd module of my 11 week classes starts on Monday.

    Definitely report back how things look in Sicily when you are there!

  12. Should be "vedo". I see.

    I certainly will. I think this year will be the year when the states become unglued. With all that debt I can't believe Congress won't pass another stimulus package (just call it something else) and the Fed implement QE3 to kick the can down the road for the 4th time (internet blow up, TARP and stimulus pkg.). These Republicans fashion themselves as fiscal conservatives. Who are they kidding? The political winds say 'no more spending' so they now make it their platform because they want to win. That's all they or anyone of these politicians want: to win. But when push comes to shove and they see the immediate effects of even a taste of austerity would bring this country would revolt and that would put their jobs in jepordy. (People really have no clue on how seriously cutting back spending would effect their daily lives. They say they want spending cuts but only those that impact everyone else). As a consequence,they will continue their spending even though they campaigned against it...until someone says enough is enough. China? Let's face it: The real difference between the Dems and Republicans is about the same as the difference between Coke and Pepsi. (Now I feel better :))

    Please, anyone feel free to comment.

    Great articles by the way Dave. Really.

  13. The States will come unglued if the Fed Govt doesnt use printed money to bail them out. I'm guessing that's what we'll see happen. There's not a politician under the sun who is willing to do the right thing even if it causes massive pain. Bernanke is a politician too. And for 5000 years politicians have printed money until the fiat currency collapses. No reason for that to not happen again. It's the human condition.