dagblog - Comments for "Buffet and the Bank of America Conundrum."

Sorry so late getting back to

EmmaZahn — Sat, 27 Aug 2011 16:38:59 +0000

Sorry so late getting back to you. I am not at all sure I understand your questions. What leverage does Schneiderman and NY state have? Not only is BOA national but also probably easily employs fifty lawyers for every state attorney general. Settlements will be negotiated with maybe a few people thrown to the lions for show.

Now a question for you. Why do you propose that if the company is nationalized and cleaned up that it subsequently be sold back out to private investors. Why not use it as the foundation of a banking sovereign wealth fund, one that can act as a countervailing power to the Fed and its primary dealers. Remember that although the Federal Reserve Bank currently acts as our central bank, it is essentially the bankers' bank, not ours. The arrangement was supposed to be mutually beneficial and has been for the most part. But times change. Like other industries, the financial sector is globalizing and looking at greater opportunities outside the US. A reevaluation of the arrangement seems like a prudent thing to do, no?

It's a mind twister. By the

Oxy Mora — Fri, 26 Aug 2011 22:22:44 +0000

In reply to Wait a second. I read that

It's a mind twister.

By the way, Walnut Place is mentioned up a couple of posts. It's a smaller entity which filed an action against BNYM before the bank went behind their backs with the larger Settlement.

But this investment still seems un-characteristc of Buffet. This is not 2008, there will not be that kind of bailout. FSOCK exists to prevent the bailouts. I subscribe to the view that Buffet is betting against Schneiderman. Probably someone has the NY Judge in their pocket and that's why Buffet forged ahead. The woman Kyle, Fed member, has a big stake in the overall settlement with the 50 states.

The bailout might be in the form of BOA just spinning off Countrywide (and do what? I don't know)

In the final analysis, Buffet is senior to the common stock holders as well as the bond holders of BOA. So in a break up of the units I assume he would be the last person standing on this pile of companies. Now that would really make him salivate.

What right do they have to

Lazy KGB — Fri, 26 Aug 2011 20:48:20 +0000

In reply to Could it be; the Obama

What right do they have to say, they rule by the consent of the governed

When they lie, they breach that consent.

Oh, that one's easy. The same folks who own them own all the TV stations. Turns out, a while back they sued in court, and yes ... anyone put on air or in print has the total right to lie (and be fired for refusing to lie). Sunrise in America or some shit.

Wait a second. I read that

Lazy KGB — Fri, 26 Aug 2011 20:34:26 +0000

In reply to Curiouser and

Wait a second. I read that wrong. (Got "Walnut Place" confused with "Timberwolf" or somesuch GS derivatives deal in my head). I suppose the comment stands in the more general sense ... ;-)

Not sure what to think about this move (and the last couple days in general) ... could be hawks looking for a kill, could be vultures looking to pick over bones ... some combination? ... folks chasing their tails? With all the action, it certainly seems flocks are increasingly starting to gather expecting some sort of feast.

Some folks are indicating Buffett has started treating the TBTF banks essentially as Treasuries; betting on another bailout. Which would indicate the powers that be have pretty much accepted as given this is going to trainwreck. Doesn't bode well for the hope of breaking up the banks, really.

Could it be; the Obama

Resistance — Fri, 26 Aug 2011 20:07:27 +0000

In reply to Curiouser and

Could it be; the Obama administration is not a defender, of truth and righteousness.

"everything hidden, will be exposed"

Everyday that passes, I am less inclined to give this government, my full faith and confidence.

What right do they have to say, they rule by the consent of the governed

When they lie, they breach that consent.

Curiouser and

Lazy KGB — Fri, 26 Aug 2011 19:59:04 +0000

In reply to Breaking news on BofA $8.5B

Curiouser and curiouser.

Ordinarily, the response would be "Gee, wonder what they're hiding." But in this case it seems there is already a pretty good idea of what they are hiding and the real question is if anyone will be able to stop them from flushing it all down the regulatory memory hole in a massive whoosh of graft and misdirection.

Breaking news on BofA $8.5B

Oxy Mora — Fri, 26 Aug 2011 19:39:48 +0000

In reply to Buffet and the Bank of America Conundrum.

Breaking news on BofA $8.5B settlement:

The entity known as Walnut Place, LLC has just filed to move the venue of the $8.5 B settlement from New York State to the U.S. District Court in Manhatten.

The filing claims that the size of the case qualifies as a "mass" action, giving federal courts jurisdiction.

BofA wisely chose Article 77 in order to provide a mechanism to make the Settlement binding upon all 530 trusts. Class action in Federal Court would allow parties to opt out of the settlement.

BofA counsel calls it a delaying tactic.

Apparently there is not Article 77 precedent for cases of the magnitude of the BofA Settlement.

In the very least, the filing today may throw a monkey wrench into Judge Kapnick's schedule of an August 30 deadline for additional bond holders to intervene in the Settlement. In other words, opposing bond holders may have more time to get organized to file motions. Apparently the Settlement was done without contact with other than the 22 largest parties, and those opposed have been slow to act because their expectations for put backs were low.

For the record I'd like to

Oxy Mora — Fri, 26 Aug 2011 16:09:00 +0000

In reply to Buffet and the Bank of America Conundrum.

For the record I'd like to define some of the Court actions.

In 2010 a group of investors in 3 MBS's stemming from Countrywide sent the Trustee, BNYM a letter demanding they sue Countrywide (BOA) to take back mortgages. Stonewalled by BNYM, the group, under the title, Walnut Place, LLC, filed an action in Feb '11 with the Supreme Court, NYS.This action was assigned to Judge Kapnick.

In the meantime BNYM reached a settlement with 22 investors in 530 MBS's, in secret and without informing Walnut Place, and filed it with the Court. NYBM specifically asked that Judge Kapnick to be assigned, for the reason that "...if approved, the Settlement (with BOA/Countrywide) will resolve the claims raised by the plaintiffs in Walnut Place, LLC"

As a separate action, on Aug 5 Schneiderman filed his motion to intervene. That motion included counterclaims against BNYM :

1. Breach of Fiduciary duty in negotiating the $8.5 B settlement.

2. Violation of Executive Law

3. Violation of General Business Law(under the Martin Act)

Schneiderman's motion also says the AG has potential claims against Countrywide and BNYM.

And in what looks like a separate action, around Aug 5, Walnut Place, LLC filed a motion to intervene in the BNYM Settlement.

Separately, Schneiderman was kicked off the global settlement(not the same as the BOA/BNYM $8.5B deal) being engineered by the 50 Attorney's general, etc. As long as New York is a hold out on the global settlement of 50 other states, Trustees signing on to that agreement would still have to face actions by New York State, and thus are less inclined to act now.

Right. As usual he cut

Oxy Mora — Fri, 26 Aug 2011 15:48:29 +0000

In reply to I suspect that the biggest

Right. As usual he cut himself a very good deal. Not to mention that if this action is able to lift bank stocks in general over time, he is also making money on any remaining warrants he might have in other banks.

You raised the issue that the

Oxy Mora — Fri, 26 Aug 2011 15:45:45 +0000

In reply to Everything on our side of the

You raised the issue that the global settlement would create a wave of seizures the deal would create. If you happen to see this, I'd be interested in your further take on it. Does it relate to the chain of custody arguments which are now providing consumers with a method of fighting foreclosures.