Wednesday, June 29, 2011

Claw-Back Liabiilty Hits Bank of America

Justice grinds slowly, but finely. The WSJ reports today that BofA has entered into a settlement agreement with certain other financial institutions that bought some of the mortgage syndication packages for which BofA was held responsible. The amount of the settlement is more than the profit that BofA has made since 2008, and the settlement is with only with a few of the buyers of these rotten financial products. So more is coming for BofA and its peers. (I should add that most of these rotten financial products were sold by Countrywide, which savings bank, in a spectacularly ill-timed decision, BofA purchased shortly before the crash.)

This explains, of course, why the big banks have been sitting on all of the money with which the government has infused them since the financial crisis arose. They knew it was coming.

This is deflationary. Watch the gold prices as this thing continues to unwind.

3 comments:

mcrachelle said...

Yep. Paid $4B for Countrywide. Paid $8B to settle with the government. That's mostly why the stock price languishes. Oh well. My group is doing relatively well.

Scott said...

That last comment was from me. Whoops.

Paul said...

BofA is working to get past all of this, and I wish them well, not only for your sake Scott, but for the country's.