Chris Whalen and Dylan Ratigan chat about Bank of America:
“What’s going on with Bank of America, and why does it matter? ”They recently announced a settlement of potential claims from Fannie Mae and Freddie Mac. These are agencies in Washington that bought over a trillion dollars in loans that Bank of America originated, or agents for Bank of America originated. So a they had portion of these loans that have gone bad or had some defect. And some of these agencies demanded that Bank of America buy a portion of these loans back. The settlement, however, is very small compared to what we actually thought this would be, I had a number close to $40 billion, and at the end of the day, the settlement is going to be high single-digit billions. So, it’s an order of magnitude smaller than most people expected. Frankly, I think it’s a gift in the magnitude of maybe $10 to $15 billion. If we had a settlement that said $20 billion or $15 billion, I think that would have been in the right ballpark. You can give the Secretary of the Treasury discretion with how agressive he’s going to be. But when Fannie Mae tells us that three out of four reps and warranties claims were essentially cured by Bank of America giving them more documents, I think that indicates that they were not very agressive,” says Chris.”
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