dagblog - Comments for "FDIC files objection to B of A $8B settlement."

Update Aug 1. U.S. District

Oxy Mora — Thu, 01 Sep 2011 23:25:59 +0000

In reply to FDIC files objection to B of A $8B settlement.

Update Aug 1. U.S. District Judge William Pauley heard arguments by BNY Mellon lawyer Ingber today to remand the bank's proceeding to approve the $8.5B between 22 investors and BofA back to Judge Kapnick's court in the New York State Supreme Court. Pauley is a Clinton appointee.

I doubt if either BNY Mellon , B of A, or Warren Buffet was thrilled with the outcome today. The bank's arguments for an expedited hearing were rejected. The judge set Sept 21 to hear arguments for removal back to Judge Kapnick. At this point there are nearly 50 intervenors and objectors to the "settlement" including banks, insurance companies, investor groups, the FDIC and states' attorneys general, to name a few.

The judge asked the lawyer Ingber several times whether his client was violating its fiduciary duty to the 530 trusts' beneficiaries.

(In the BofA settlement filed by BNY Mellon (as Trustee) the objective was to have New York State Supreme Court Judge Kapnick approve the settlement and simultaneously make it binding on all beneficiaries even though the settlement only included 22 investors--less than 51% of all investors. The case was removed to Federal court by an intervening party.)

Judge Pauley also asked Ingber if BNY Mellon was trying to prevent objecting investors from derailing the deal by using a procedure "the main benefit of which is to limit the right of trusts' beneficiaries to opt out of the settlement."

For the record, Bloomberg

Oxy Mora — Wed, 31 Aug 2011 21:49:23 +0000

In reply to FDIC files objection to B of A $8B settlement.

For the record, Bloomberg just reported that Goldman Sachs has filed against the BofA "settlement"

Also that Robert P. Kelley is stepping down as CEO of BNY Mellon in regard to differences with the Board--you mean, over the engineering of a questionable and self-dealing arrangement with one of it's largest customers, BofA, which led to a fraud suit under the Martin Act by the New York State Attorney General, Eric Scheiderman--you mean that difference?

Not Anonymous, but maybe a

Oxy Mora — Wed, 31 Aug 2011 15:08:06 +0000

In reply to The other suit brought

Not Anonymous, but maybe a message to lighten up, had to re-sign.

I don't have an investment stake in any of this. I think what happens to B of A affects everything else because it is so large and it is such a player in the log jam of foreclosures.

The other suit brought

Anonymous — Wed, 31 Aug 2011 14:58:31 +0000

In reply to In addition to the subject

The other suit brought against B of A/Countrywide was filed in Federal Court yesterday by a group of Homeowners. My understanding is that it objects to the $8.5B settlement, but isn't being filed as an intervenor request in the manner of the other 50 or so filings.

The purpose of the June 29th announcement of the $8.5B "settlement" between B of A and 22 large investors in the subject 530 trusts, plus the simultaneous petition by BNYM to the NYSSC to approve the settlement and make it binding upon all bondholders in the 530 trusts was obviously an attempt to railroad a settlement before the opposition could get organized. Schneiderman's filing for intervenor status on Aug 5, which included counter claims of fraud (which have as yet to even be addressed by judge Kapnick) started the ball rolling for opponents of the "settlement".

Again, what is at stake money-wise in the BNY Mellon petition is significant. What else is at stake are any precedents which might be set in releases of liability to the banks. And, again, much of this litigation for the moment is related to breaches of warranty, not fraud. Suits for fraud are already in progress and there will be many more to come.

What else is at stake are the practices of servicers like Countrywide, their focus on foreclosures as opposed to modifications, and the resultant impact of all of this on the economy and unemployment.

What opponents fear is a half baked settlement which won't make the pension funds whole and poor attempts to reform the mortgage system--particularly the behavior of servicers as well as future securitizers.

In addition to the subject

Oxy Mora — Wed, 31 Aug 2011 14:33:43 +0000

In reply to FDIC files objection to B of A $8B settlement.

In addition to the subject FDIC filing as an intervenor on the $8.5B suit, a small avalanche occured yesterday, Aug. 30, the date set by Judge Kapnick for those seeking to intervene in the "settlement". It has been estimated that an additional 20 filings were submitted. There were already 20 or 30 filings, a great many of which had been granted intervenor status. So the total number of entities is perhaps as high as 50.

In addition to the 20 or so new objectors to the $8.5B settlement, two additional suits were brought against B of A/Country wide.

U.S. Bancorp brought suit against B of A/ Countrywide in the New York State Supreme Court in the matter of $1.9B in loans purchased by investors where U.S. Bancorp was the Trustee. The suit alleges breaches of warrant ies on the part of Countrywide. This is a different kettle of fish than the 530 trusts at issue in the $8.5B "settlement". The $1.9B pool of loans were packaged by other entities but securitized by CW, and the bond deal is known as "Harbor View Loan Trust" (quaint, as the loans were packaged in Greenwich, Conn) Apparently Harborview is one or more of a total of 442 bond deals in this category for which B of A has reserverd for potential losses in the $5B range. (I don't know what the par value of the total of 442 bond deals is.) U.S. Bancorp, as Trustee, is suing CW to take back part or all of the loans. Their claim is that Breaches of warranties were found in 66% of 786 loans sampled. Of the 2,084 loans left in the bond deal, 46% have defaulted or were at least 60 days delinquent at the end of June, 2011.

You are welcome. As someone

Oxy Mora — Tue, 30 Aug 2011 18:57:42 +0000

In reply to Thank you Oxy Mora for

You are welcome. As someone has said, this $8.5B "settlement" is like a fish, the more you look at it the more it stinks. And my purpose is twofold.

One, there is a very slim chance that this litigation would force B of A to try and put Countrywide into bankruptcy, thus insulating the bank from liability. But the bank has entangled parts of CW with its own operations, so CW may no longer be an arms length subsidiary. The bank may(I give it 1 in a 100) thus become a candidate for dissolution under FSOCK--in the event it is looking at $30B or more of unresolved penalties. If you include just MBIA, AIG and something like $8.5B in this suit, plus other fraud suits, e.g., from NY AG Schneiderman, not to mention other states, the aggregate gets up into the $30B range.

The other issue is that the fight seems to be between "investors" who purchased the MBS's and the banks--the banks in various roles as originators, servicers, securitizers and trustees. But what is left out are the pensioners whose money may have been invested in these non-performing MBS's by various "investors". At Countrywide, nearly $100 B of the 530 trusts (total par value of $424B) are being essentially written off for $8.5B. So as usual, it's the little guy teacher, fireman, etc. that is being screwed. The better part of $100B may be reduced to $8.5B.

Thank you Oxy Mora for

Resistance — Tue, 30 Aug 2011 17:13:26 +0000

In reply to FDIC files objection to B of A $8B settlement.

Thank you Oxy Mora for keeping us informed.