REPORT: Another Secret Bailout For Bank Of America

The NY Fed secretly bailed out Bank of America last Summer, and it's just coming to light now.

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Don't Blink, Or You'll Miss Another Bailout

New York Times

By Gretchen Morgenson

Many people became rightfully upset about bailouts given to big banks during the mortgage crisis.  But it turns out that they are still going on, if more quietly, through the back door.

The existence of one such secret deal, struck in July between the Federal Reserve Bank of New York and Bank of America, came to light just last week in court filings.

That the New York Fed would shower favors on a big financial institution may not surprise.  It has long shielded large banks from assertive regulation and increased capital requirements.

Still, last week’s details of the undisclosed settlement between the New York Fed and Bank of America are remarkable.  Not only do the filings show the New York Fed helping to thwart another institution’s fraud case against the bank, they also reveal that the New York Fed agreed to give away what may be billions of dollars in potential legal claims.

Here’s the skinny: Late last Wednesday, the New York Fed said in a court filing that in July it had released Bank of America from all legal claims arising from losses in some mortgage-backed securities the Fed received when the government bailed out the American International Group in 2008.  One surprise in the filing, which was part of a case brought by A.I.G., was that the New York Fed let Bank of America off the hook even as A.I.G. was seeking to recover $7 billion in losses on those very mortgage securities.

Let’s recap: For zero compensation, the New York Fed released Bank of America from what may be sizable legal claims, knowing that A.I.G. was trying to recover on those claims.

It gets better.

What did the New York Fed get from Bank of America in this settlement?

Continue reading at the New York Times...

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This wasn't the first time:

Bank Of America's Backdoor Bailout - Dumping Mortgage Trash Onto Taxpayers Via Fannie Mae

Photos by William Banzai7...

Comments

[SKINFLINT]

How the FUCK is this even legal? I am assuming that the tax payer is on the hook according to the article. Can one private institution take over the liability of a public institution for no other reason than to make public the responsibility for the fraud? Also hasn't it been established ad nauseum that the federal reserve is a privately held institution. Why even make the statement to the contrary. Banzai of course is wicked. I wonder how he is even able to peak his head out the door. Where is be mein?

[DailyBail]

Bailout Alums, Five Years Later

http://www.cnbc.com/id/100407992

[DailyBail]

I am assuming that the tax payer is on the hook?

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The NY Fed screwed AIG, and protected Bank of America. It was a gift from the Fed, a bailout of sorts, and it saved BofA billions. I suppose the Fed could have settled with BofA for a few billion, and then passed that along to the Treasury at the end of the year (like they do every year), so in that sense, the taxpayers did miss out on a few bucks.

[S. Gompers]

Ain't that special, meanwhile BOA frauds and crimes continue...

[chiller]

When you're above the law for as long as these financial fraudsters have been, sleepy Americans begin to notice. But by the time that happens....it's too late. Besides...what do you plan to do about it? Call the cops? They know they must have all our 2nd amendment vehicles of freedom before we wake up or we can cause them a formidable problem...The time is NOW for US to be a problem to THEM!

[Cheyenne]

The NY Fed is just ridiculous. At times it pretends to be a court, at times a regulator, but always maintaining the absurd position that it gives a shit about the taxpayers, at least until it's caught taking a dump on their faces. Then it just shuts up and refuses to talk to reporters. And throughout it all, the NY Fed's wet finger is in the air trying to figure out how to transfer money to the perpetrators of criminal fraud.

Who owns the fraud claims against BofA for the worthless MBS it sold?

"Initially, in an October 2011 letter to A.I.G., the New York Fed agreed that the insurer had the right to seek damages under securities laws on instruments it sold to Maiden Lane II."

Now, since the NY Fed is a party to the deal, and is undeniably NOT a court of law, its 10/11 letter is a straight up admission by a party opponent that AIG owned the fraud claims as of October 2011.

Now watch what the NY Fed purports to do with this property (the legal claim) that according to the Fed itself is owned by AIG:

"the New York Fed disclosed its confidential July 2012 deal with Bank of America, releasing it of any liability arising from fraud in the Maiden Lane II securities."

SHAZAM!!! The NY Fed makes the property VANISH, kids!!! The NY Fed wasn't a court after all, it's even more powerful: the Fed is a MAGICIAN!!!

A lot of people eagerly await the outcome of the bankers' Houdini act with real rope and real lamp posts.

In the mean time, we'll see what the court says about the Fed's ludicrous contortions with AIG and BofA.

[DailyBail]

Bank Of America's Backdoor Bailout - Dumping Mortgage Trash Onto Taxpayers Via Fannie Mae

http://dailybail.com/home/bank-of-americas-backdoor-bailout-dumping-mortgage-trash-ont.html

Here's another example.

[Backgammon]

This is not a site I read on a regular basis, but thought you might be interested.

Power Grab at the Fed



Mike Whitney takes Congress to task for wanting to grant the Central Bank extraordinary new powers to deal with future financial system emergencies.


http://www.counterpunch.org/2013/02/22/power-grab-at-the-fed