Did Bank of America Write the Housing Bailout Bill?


"We call it the ‘Bank of America bill on steroids.’"
-Anonymous House staffer


The staffer was referring to the Dodd-Shelby bill that would let mortgage lenders off the hook for bad loans, ultimately shifting the burden to taxpayers.

The Bank of America paper referenced is this document, a PDF marked Confidential and Proprietary, titled the "FHA Housing Stabilization."

This was first picked up by the NY Examiner, followed by the National Review Online, who noted that "the similarities between BofA’s ideal bill and the bill before the Senate are obvious." Then lastly, an LA Times blog, LA Land, put all the separate pieces together with this post: Did Bank of America write the Dodd bailout bill?

The White House has now promised to veto the bill. That suggests that, barring any last minute changes, this Housing Bill looks to be DOA.


I don’t understand why a realistic bill can’t be hammered together. It should reflect the following realities:

Home prices remain elevated;

Artificially propping up home prices is counter-productive 

Those Homeowers who are in houses they cannot and never could afford are going to have to give up those homes and move;

The banks that made these bad loans to unqualified borrowers are going to have to take the writedowns; 

It is not the taxpayers responsibility to bailout borrowers who are in over their heads, or lenders that made bad loans.

How hard can that be? (Do I really have to do everything myself?)




FHA Housing Stabilization

Bank of America, March 11, 2008

Download: BoA FHA Housing_Stabilization.pdf

Did Bank of America write the Dodd bailout bill?

Peter Viles

L.A. Land, June 21, 2008


NRO Doc Drop: BofA-Scripted Bank Bailout Looks Awfully Similar to Dodd-Drafted Housing Bill   

National Review, June 20, 2008


Bank of America PAC money behind Dodd’s Countrywide loan

Timothy P. Carney

The Examiner, Jun 19, 2008 1:37 PM


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What's been said:

Discussions found on the web:
  1. VJ commented on Jun 22

    The banks that made these bad loans to unqualified borrowers are going to have to take the writedowns

    Perhaps you have a better view out your window, are pigs flying ?

  2. ronin commented on Jun 22

    As though we haven’t been bailing out everyone in sight already..

    Would explain why B of A still wants to buy Countrywide, though.. expecting a bailout.

  3. VJ commented on Jun 22

    BTW, Jim Cramer on this mornings ‘Chris Matthews Show‘:

    “I’ve been viciously negative about housing, to the point where the National Association of Realtors did a letter-writing campaign to get me fired, because I said on the ‘Today Show’, I guaranteed that your house would lose value, about nine months ago. I am now guaranteeing this. Nine months from now, you will regret it if you haven’t bought a house. Totally contrary view. Housing will bottom nine months from now.”

    Eh, what about the additional 3 million homes that will be foreclosed on over the next 18 months ?

  4. Mike in NOLA commented on Jun 22

    Agree with Ronin that BOA’s purchase of zombie Countrywide made no sense unless they knew that all those billions in bad loans would be bailed out.

  5. clip bartow commented on Jun 22

    the part that gets me is the people who either refied several times (ie took most/all of the house profit out) and/or the serial flippers who bought and sold several/many times for a profit and now might get their latest acquisitions bailed out. i haven’t been able to find any numbers on the refi folks, their numbers and the amount taken out (the mew reflects some of this, i guess). just about every foreclosure story i read, and there have been a lot, begins with the owner admitting to multiple refis and, by doing so, taking out the house appreciation. i don’t have much sympathy for these guys. if i bought jnpr at 50 and sold it at 200 and then re bought it at 300 and got a margin call and had to sell it at 250, did i get a bailout? what about the profit i’ve already taken out of the house? i’ve seen no comments on this in all the drivel i’ve read about the homeowner bailout legislation. barry keep up your fine work. clipb

  6. RW commented on Jun 22

    Cramer and Matthews, a perfect storm of hot air; wonder how many boats sunk.

    Of course we can accept at face value Cramer’s assertion that he was “viciously negative about housing” and that NAR tried to get him fired, etc.

    Still it wouldn’t surprise me if a few markets, the poorest and/or those that fell the fastest and hardest at least, are approaching bottom but so what: Buying in the next year would only provide paltry bragging rights, “I caught the bottom,” while waiting another 2-3 years before the market turned around enough to make a decent profit; a serious opportunity cost with the possible exception of the few locals who really know how to play the distressed property game.

  7. dukes commented on Jun 22

    Great post Barry. I think it is interesting that BofA wants to lay this all off on Ginnie Mae. This is truly transferring all the shitty CWide risk directly onto US Taxpayers. If I am not mistaken Ginnie is the only agency that commands a direct obligation of the US Govt. as opposed to Fannie and Freddie’s implied obligation.

  8. brion commented on Jun 22

    “The White House has now promised to veto the bill. That suggests that, barring any last minute changes, this Housing Bill looks to be DOA.”

    erm, i think this is going to pass with an override Barry.
    Yup. Too many ‘LITTLE” people are counting on this one this election year. Beside every senator in line for BOA’s largesse, there’s Aunt GINNIE, with uncle FREDDY and cousin FANNIE a little further down the road….
    Pigs don’t fly these days, they JET. {with Dems at the throttle sad to say…}
    Corporate welfare at it’s finest.

  9. me commented on Jun 22

    What’s in the bill that the White House doesn’t actually like, which one of their favorite lobbies does it hurt, how and why? ‘BoA wrote the bill!’ is subterfuge.

  10. Adam commented on Jun 22

    Damnit Barry, stop saying things that make sense. In this day and age, that just fries the circuitry of my brain.

  11. Marcus Aurelius commented on Jun 22

    The whole thing (oil, the war, cronyism, bank bail-outs, immunity for telecoms) reeks of fascism.

    It reeks.

  12. investorinpa commented on Jun 22

    Barry & others…when are we going to see B of A go the way of Citigroup and see all its respectability gone? They are soooo overdue for a sharper drop. After that, Goldman Sachs

  13. Automated Robot commented on Jun 22

    Don’t despair, if Bushco vetoes the homeowner relief bill, President Obama will sign a more comprehensive bailout next year. Go long mortgage lenders, banks and anything having to do with real estate.The whole financial and real estate industries will be backed by the full faith and credit of the United States Government.

  14. Mark Hessel commented on Jun 22

    I agree with everything you say
    in you post, but based on what
    you think needs to be done, what exactly has to be legislated in
    this matter?

    Isn’t everything in place for that
    to happen?

  15. EB commented on Jun 22

    Well, Dodd the Democrat goy cheap money from Country Fried. Now it’s pay back time for that and his big political contribution from BoA

  16. rj commented on Jun 22

    “erm, i think this is going to pass with an override Barry.
    Yup. Too many ‘LITTLE” people are counting on this one this election year.”

    On the bright side, only a third of the senators are up for re-election this year.

  17. rj commented on Jun 22

    “Well, Dodd the Democrat goy cheap money from Country Fried. Now it’s pay back time for that and his big political contribution from BoA”

    For the record, this bill along with Dodd is also co-sponsored by Richard Shelby, Alabama Republican Senator.

  18. Trainwreck commented on Jun 22

    “How hard can that be? (Do I really have to do everything myself?)”

    Like Superman, yes you do. But I appreciate what you do!

  19. Bob A commented on Jun 22

    “Those Homeowers who are in houses they cannot and never could afford are going to have to give up those homes and move”

    … and it will be better for everyone if they do. Since they will spend the money they save (the difference between what they’re paying in interest only on the house/lottery_ticket they can’t afford, and what they can rent suitable housing for even if it’s not as nice) on consumables… which will make a much bigger difference to the economy than those tax rebate checks ever did.

  20. Bob A commented on Jun 22

    “It is not the taxpayers responsibility to bailout borrowers who are in over their heads, or lenders that made bad loans.”

    Unfortunately, much of the losses have already been taken by buy and hold investors who believed those (you know who, including the tv clown mentioned above) who told them last spring and summer everything was ok/”contained” and sat and watched as their equity in bank stocks vaporized.

  21. John F. commented on Jun 22

    (Do I really have to do everything myself?)

    I hope not, but it wouldn’t hurt to try and get this post into the hands of some people in the mainstream press, where financial illiteracy and discomfort with numbers run rampant.

  22. brion commented on Jun 23

    “A lowered interest rate could be regarded as an odd form of socialism. It makes the rich man’s money worth less and helps the poor borrower out.”

    Tell that to the barista mom eying a $5 gallon of milk or gasoline…

  23. soNotInTheKnow commented on Jun 23

    BAC with the help of the ‘friends of Angelo’ wrote the bill.

  24. Simon commented on Jun 23

    Ya! Joshua Shipiro agrees with me. He’s obviously read John Kenneth Galbraith’s books too.

    I note he is an author recommended here on TBP.

    Luckily our local library has him too.

  25. BG commented on Jun 23

    You know that Chris Dodd thing stinks to high heaven!!

    What a greedy, selfish SOB!! And then to have the audacity to stand-up in front of the media in such a stoic fashion as to act like everything is above board!

    You fucking bastard!! FU Chris Dodd!!!!

  26. Jeff commented on Jun 23

    Barry, to get the 4 results you list (and with which I agree) you do not need a bill. Just let the market play out. The false assumption people make is just becasue there is a problem we need congress to pass a bill. Again the best solution is a do nothing congress. Let the market run its course without governement intervention is like usual the best solution.

  27. larster commented on Jun 23

    RE co-sponsorship by Shelby. I believe he is a real estate investor masquerading as a senator. Hew is feathering his own nest. What else is new.

    The R’s constantly talk of giving us freedom from goverment, while the gov now backs up approx 80% of all housing loans through Ginne Mae, Fannie Mae, and the Federal Home Loan Bank. Creeping socialism is in vogue.

  28. TM commented on Jun 23

    Lowering interest rates only helps borrowers in the short term. The mid to longer term implications is downward move of the dollar and thus you get 5 dollar a gallon gas. This is creating a massive transfer of wealth from the bottom to the top.
    Oh and this is the same banking bill that will require people in the private banking industry to submit their finger prints to the FBI. It also has another riding requiring credit card, paypal, etc transaction reporting to the Feds for almost all purchases.
    It appears BOTH parties are in a race to see which one can push us over the edge to totalitarianism.

  29. DonKei commented on Jun 23

    “I believe [Richard Shelby] is a real estate investor masquarading as a senator”

    Yep. His major asset is an interest in an outfit called Tuscaloosa Title, a real estate closing and title insurance firm in his home town of Tuscaloosa, Alabama.

    They practically own the market down in Tuscaloosa, the home of the University of Alabama and a big Mercedes Benz plant.

  30. Dave commented on Jun 23

    There are murmerings of similar bills in the UK. Utterly ridiculous for the same reasons you have outlined Barry. Thank God we don’t have a general election round the corner, otherwise messrs Brown and co would be up to all manner of silly tricks (aside of course from backtracking on the 10 tax rate)

  31. michael schumacher commented on Jun 23

    This should not be a surprise to anyone…..
    Mildly amused is my response although should times be a little “different” I suppose I would be surprised.

    It was 110 in my back yard when I returned home yesterday from waking up to rain and 55d in southern Wash.


  32. cjc commented on Jun 23

    Late to the comments here, but the only bailout that is needed is to victims of predatory lending. The government should make sure that people with decent credit who bought a house with a 2/28 and should have gotten Fixed30 can now refinance and stay in their home. I am talking about the lesser priced neighborhoods, less than average education, lower incomes… The poor neighborhoods really. The ones that were targeted for subprime loans.

    If you can afford a fixed 30yr loan payment at prevailing rates, Agency Loans could be extended to you based on the purchase price LTV, so that you can still get a loan. The tragedy here is that people got adjustable mortgages that should not have. And now, with a 10% drop in prices, Refinance to a fixed or a ‘better’ mortgage is not available. (with the 2/28, it was always contemplated that you could ‘refi’ in a couple years.)

    It’s only those people we should ‘save’. I know, it sounds dumb talking about the gov making high LTV loans at this point in time, but the fed window is open to the banks.

    There is a wave of adjustable rate mortgage coming. More trouble ahead. I see the failures coming as financing dries up. If they closed the TAF and other fed “refis” many banks would go broke nearly immediately. If the foreign banks or countries stopped buying our debt and closed their lending window, the USA would (go) belly up too.

    So there are some people, who could stay in their house if they had some refi help that would ignore underwater status to the tune of say 10% or, for refi purposes, use the purchase price. Otherwise, the window is closed for them, and tons of inventory hits the market- compounding the problem.

    If you’re still with me, I’m talking about owner occupied, less than $250k properties, mortgages facing resets. If you took cash out, no deal.

    Others have said. Let the market work. Rent for a few years. I think there is an enormous amount of loss associated with foreclosure. Putting a padlock on the door lowers the price even further.

    Or, excessive borrowing is only for the gov and the big banks, not for people. They call it liquidity.

    my 15 cents.


  33. CynicfromOhio commented on Jun 23

    first- they signed it! Like it or not, it’s a well prepared document that has traceability and clearly states the assumptions and sources.
    second- I don’t have a problem with BofA or lobbyists contributing to or ‘writing’ bills if they present their ‘wishlists’ in the form of this BofA document.
    third- I want that the financial community and their political cronies punished/ruined, but I don’t want to be the ‘collateral damage’ that seems to be inevitable.

  34. brion commented on Jun 23

    “the only bailout that is needed is to victims of predatory lending”

    let em all rot. ALL of ’em.

    every lender, every “owner”, every broker, every appraiser, every victim…..& they are ALL victims, fuck ’em.

    then maybe we won’t have to go down this yellow brick road for another 80 years or so

  35. CommonSense commented on Jun 23

    If I had a hammer, I’d hammer in the morning, I’d hammer in the evening all over this land…I’d hammer out justice, I’d hammer out Washington! Oh, oh and Wall Street too! How much can we let Crony Capitalism destroy US?

  36. Pat G. commented on Jun 23

    Well of course, silly. Dodd was too busy making deposits to his next war chest from BOA and friends of such a bailout. Don’t get me wrong as I see public beheadings as brutal in scope but is it any wonder that countries who oppose us look at democracy and say..no way. Everyone sinks or swims together.

  37. Jay Gischer commented on Jun 24

    You’re beginning to sound like Andrew “Liquidate Everything” Mellon.

    I for one, would like more details. All I can say about the threatened Bush veto is that the oil companies must think it’s bad for them.

  38. Michael commented on Jun 27

    This is really disturbing news. The connection with Dodd and countrywide was bad. It really looked like they were both benefitting from the bailout bill at the taxpayers expense. Now to find that Bank of America has authored major parts of this bill, and plans to buy countrywide, this is just too much. Oh, and don’t forget the credit card reporting scheme and the finger print identification thing. I find out all the latest at this site:

  39. Iris commented on Aug 7

    God help this country if that is the case. I hope bofa falls on their face.

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