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View Full Version : Sorry Folks, the Put-Back Apocalypse ain't gonna Happen (legalizing bank fraud)?



Apparition
19th October 2010, 12:22 AM
By: John Carney
Senior Editor, CNBC.com

You should probably be a buyer of Bank of America right now.

I never thought I’d find myself typing those words. I’ve been a huge critic of Bank of America for years. I'm bearish on the financial supermarket model. I don't think the acquisition of Merrill Lynch is working out. I still don't understand the logic of buying Countrywide.

But Bank of America's recent decline—down almost 10% this week—is driven by fears that the bank could be hit with huge liabilities for faulty mortgage pools. And I’m pretty sure that is not going to happen.

Why not?

Because the politicians will not let the financial stability of the largest bank in the nation be threatened by contractual rights. Not when there’s an easy fix available that won’t cost taxpayers a dime.

Here’s what is going to happen: Congress will pass a law called something like “The Financial Modernization and Stability Act of 2010” that will retroactively grant mortgage pools the rights in the underlying mortgages that people are worried about. All the screwed up paperwork, lost notes, unassigned security interests will be forgiven by a legislative act.

There’s a big difference between the financial crisis of 2008 and the new crisis. In 2008, banks were destabilized by the growing realization that they were over-exposed to the real estate market. Huge portions of their balance sheets were committed to mortgage-linked investments that were no longer generating the expected revenues or producing losses. That was a problem of economics that could only be solved by recapitalizing banks or letting some of the biggest banks in the U.S. fail.

The put-back crisis is not driven by economics. It is driven by legal rights. And there’s simply zero probability that the politicians in Washington are going to let Bank of America or Citigroup or JP Morgan Chase fail because of a legal issue.

So here’s what I expect will happen. The lame duck session of Congress will pass a bill that essentially papers over the misdeeds of the banks that originated mortgage securities. Every member of Congress and every Senator who has been voted out of office will cast a vote for the bill. And the President will sign it.

Will the public be outraged? Probably. Financial bloggers will scream from the high heavens against another bailout of the banksters. Congress may try to create some cost for banks in exchange for the forgiveness, perhaps requiring more mortgage modifications.

But the much feared put-back apocalypse will be laid to rest.

If you’re skeptical about the possibility that this will happen, you have greater faith than I do in the ability of the political system to resist doing favors for bankers.

Source: http://www.cnbc.com/id/39686897


Don't be surprised if this actually occurs, people...

Olmstein
19th October 2010, 12:51 AM
I can totally see all the lame duck members doing this on their way out, in the hopes of getting some good post-congress jobs and favors from Wall Street.

Glass
19th October 2010, 01:41 AM
I won't be surprised. I pretty much expect it to happen. What is still a question at the moment is the titles. The lack of a note holder is easily resolved this way but if the titles are resolved this way then all property rights in America are extinguished completely. For any property they want they can simple create a new document and call it title and that's it. All over.

Book
19th October 2010, 06:09 PM
Will the public be outraged? Probably. Financial bloggers will scream from the high heavens against another bailout of the banksters. Congress may try to create some cost for banks in exchange for the forgiveness, perhaps requiring more mortgage modifications.

http://orlandofitnesstogether.com/wp-content/uploads/2010/07/self-employed-slob.jpg
Will Dancing With The Stars still be on at 7pm?




"Public Outrage"

:ROFL:

mightymanx
19th October 2010, 08:59 PM
Old news It was called HR 3808 passed both house by voice vote so there was no record

Obama Pocket vetoed it to my amazement. but he could still sign it at any time.

But he covered up the fact that it ever existed much to my annoyance.


http://www.govtrack.us/congress/bill.xpd?bill=h111-3808