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BofA “Bad Bank” for Legacy Assets: Will This Eventually Be a First Use of Dodd Frank Resolution Powers?

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In a move not noticed much three weeks ago, Bank of America announced that it was segregating its crappy mortgages into a “bad bank”. It got more attention today by virtue of being discussed long form in an investor conference call (see related stories at Bloomberg and Housing Wire).

The use of a “bad bank” is strongly associatied with failed institutions. Some of the big Texas banks that went bust in the 1980s (Texas Commerce Bank and First Interstate) used “good bank/bad bank” structures to hive off the dud assets to investors at the best attainable price, and preserve the value of the performing assets. The Resolution Trust Corporation, the workout vehicle in the savings and loan crisis, was effectively a really big bad bank. The FDIC is (and I presume was) able to sell branches and deposits pretty readily; the remaining bad loans and unsellable branch operations reached such a level that the FDIC was forced to go hat in hand to Congress and get funding while it worked out the dreck. A similar structure was used in in the wake of the banking crisis in Sweden in the early 1990s.

I am told by mortgage maven Rosner and others that this move is not meant as a legal separation, but a mere financial reporting measure, so that BofA can declare, “See, we do have this toxic waste over here, but we are chipping away at it and we’ll have that resolved in some not infinite time frame” (the current talk is 36 months) “and look at how the rest of the bank looks pretty good!.”

So I may be accused of being cynical, but I read more into it than that. One distinction I like to make is between “stated truth” and “operative truth”. If a woman of a certain age starts working out, she might truthfully say to her buddies (“stated truth”): “I used to do a lot of sports when I was young, I’ve gotten out of the habit. I started exercising over the holidays, and it made me feel SO good I’ve now decided to stick with it.” The operative truth instead is, “I notice my husband eyeing younger women way too much. I have gotten a little porky. If I don’t get some semblance of the beautiful body of my youth back, he could stray.”

As we all know, shareholder presentations are a realm where stated truths are used routinely to mask operative truths. So the question is: can we infer the operative truths behind the BofA move?

What is striking is the tension between Bank of America saying that this is a measure designed provide more transparency to investors and put dedicated resources on a festering problem to get it resolved versus the specific and loaded terminology they used to describe it, “good bank/bad bank”. Normally, you’d assume that an investor presentation by a big public would be a deliberate affairs. But as Chris Whalen said to me by phone, “I wouldn’t assume that the people at Bank of America are being any more logical than they have ever been. They are just making this up as they go along.”

It is important to stress that this is not a mere accounting separation, it’s an operational split. I encourage readers to look at the investor presentation (click here as an alternative to the embedded version). In particular, note page 6. It shows the creation of a dedicated management team for what was described to investors as a new division. Most of them were probably part of the old Countrywide servicing unit. But the head, Laughlin, is new, and I would assume that at least Ellison and Schloessmann were at BofA corporate but already working close to full time on Countrywide matters.

Bank of America Bad Bank Presentation

But the weird part is, per Whalen, this is NOT a legal separation. However (putting on my M&A hat, and Whalen did not disagree) normally the big obstacle to companies hiving off divisions is the lack of a stand-alone management team. Note that that does not impede a sale, but selling a legal vehicle with revenues, staff, but a less than full management structure means you are basically selling a bunch of assets (which includes some management people and maybe some systems) rather than a business. It can only go to buyers who can provide the missing operational parts. Stand alone entities are vastly more saleable and command higher prices. And my belief (readers welcome to correct me) is having achieved operational segregation (in particular a stand alone management team, good stand alone operational reporting and financial controls), making a legal separation would not be that hard.

Thus the use of “good bank/bad bank” lingo, given what Whalen and others see as serial improvisation on behalf of BoA, may amount to a Freudian slip. The bank is probably enough in denial to believe that their putback and other losses really are well under $10 billion (we agree with them on putbacks, we’ve written repeatedly that we think those cases are overblown, but we think there are other chain of title issues that they have not treated seriously that will add up to much more in the way of legal liability and operational costs).

Having a separate operational unit means in a worst case scenario, BofA might be able to amputate this business in classic “bad bank” form. So whether by design or accident, the coded message in the choice of “bad bank” is: “If those crazy hedgies who say our liability is $70 billion are right, so what? They can all go pound sand.”

But could it really hive off ugly legal liabilities? Even though that may be what the BofA people would like to tell those nasty hedgies, the Charlotte bank stopped running the old Countrywide as a separate, bankruptcy remote entity not long after the deal was closed. So it would now seem hard to limit the legal liability to what would amount to a reconstituted Countrywide (but as we discuss later, with some help from their friends, who knows what might be possible…)

But let’s say those crazy hedgies are right in the dollar amount of liability, even if for the wrong reasons. BofA would be in serious trouble.

I’ve been completely skeptical of the resolution provisions of Dodd Frank for a simple reason: I’ve assumed, as in the financial crisis just past, and the big recent ones (the LTCM meltdown of 1998, the 1994-5 derivatives wipeout, which produced more losses than the 1987 crash) that they would center on the dealing operations of the major dealer banks (you may not have realized it, but the US rescue of Mexico was really a bailout of US banks that had written a boatload of derivatives on various Mexican exposures).

In our modern world, where major dealers have globe-ringing trading operations, there are two insurmountable obstacles to a tidy resolution of a major dealer. Any “resolution” will be subject to the laws of the multiple nations in which it operates. Dodd Frank does not have any authority outside the US. In addition, no counterparty wants to have his positions frozen while the courts are sorting out who gets what. If any major dealer is believed to be in serious trouble, no sensible counterparty will want to be exposed. And an untested resolution regime is not very reassuring. The run on Bear Stearns took a mere ten days. The authorities will be forced to bail out a major dealer if it starts to founder. And the banks know that all too well.

However, there is one place Dodd Frank resolution procedures might work, and that is on a strictly domestic non-trading operation. As former White House counsel Boyden Gray discussed disapprovingly in the Washington Post last year:

The Treasury can petition federal district courts to seize not only banks that enjoy government support but any non-bank financial institution that the government thinks is in danger of default and could, in turn, pose a risk to U.S. financial stability. If the entity resists seizure, the petition proceedings go secret, with a federal district judge given 24 hours to decide “on a strictly confidential basis” whether to allow receivership.

There is no stay pending judicial review. That review is in any event limited to the question of the entity’s soundness – not whether a default would pose a risk to financial stability or otherwise violate the statute.

The court can eliminate all judicial review simply by doing nothing for 24 hours, after which the petition is granted automatically and liquidation proceeds. Anyone who “recklessly discloses” information about the government’s seizure or the pending court proceedings faces criminal fines and five years’ imprisonment. As for judicial review of the liquidation itself, the statute says that “no court shall have jurisdiction over” many rights with respect to the seized entity’s assets (thus apparently eliminating many actions that would otherwise be permitted to seek compensation in the federal Court of Claims).

Gray described the process as a “star chamber” and further warned:

This means the U.S. Treasury and Federal Deposit Insurance Corp. are acting as a sometimes secret legislative appropriator, executive and judiciary all in one. Although there is little direct precedent, it is hard to believe that the Supreme Court would not throw out parts of this scheme as violations of either the Article III judicial powers, due process or even the First Amendment, assuming the justices do not find all of it a violation of the basic constitutional structure….Dodd-Frank strips the courts of the right to make statutory and constitutional determinations in critical circumstances, a throwback to the very first draft of the Troubled Assets Relief Program from the Treasury Department, which would have permitted no judicial review at all.

The problem is that the idea of Supreme Court intervention would wind up being theoretical. As former federal district court clerk Hans Bider of the Washington Examiner noted, district courts are incapable of actin on anything in 24 hours, so the inaction means the seizure by the Star Chamber will be deemed to have been approved. And the odds that anyone will be fast footed enough to run to the Supreme Court and get an injunction is unlikely (and may be a jurisdictional non-starter, given that matter would still be in the hands of the district court, even though it is clear that it will not rule in time). Once the Star Chamber has made the bank seizure, that hoary old saying will apply: possession in nine-tenths of the law.

Boyen’s concern was a repeat and probable escalation of the controversial actions during the bailouts, in particular the sort of favoritism we saw in the the AIG rescue, with creditors like Goldman and Merrill being paid 100% on credit default swap exposures that were clearly worth a lot less.

But I see another way this could operate. Let’s say the Lilliputians really do continue winning against the banks, and in particular Bank of America, in the courts. Their litigation losses and projected litigation liabilities mount at a faster pace (and that could happen even more quickly if investors decide to sue).

The FSOC tells Bank of America to put the legacy assets in a separate legal entity. Using its Star Chamber powers, it seizes the bank (either the entire bank, immediately spinning out the rest, or just the bad bank, the niceties of how you’d execute this maneuver are above my pay grade).

The powers that be then by fiat treat all the mortgage-related claims as liabilities of the bad bank. That bank has very little in the way of assets, so those creditors get paid a fraction of the value of their claims. Since this mechanism is beyond legal review, the creditors would be stuck with a fait accompli. They’d have no way of getting recoveries from other bank assets (the notion being that every penny paid in dividends and bonuses since the Countrywide acquisition really belonged to the bank’s creditors and claimants, so recoveries from the bank as a whole are fully warranted).

You can assume any scheme like this would be subject to Constitutional challenge. The creditors would no doubt argue that they had valid claims against the good bank, ergo the regulations surrounding the resolution would not apply (this risk might argue for resolving the whole bank and spinning the good bank assets, and probably the publicly traded liabilities out).

Is this way of screwing those who win in court as a result of foreclosure fraud possible? This scenario no doubt sounds like a stretch. But if you had told anyone in June of 2007 the events of the next two years, particularly the extent and ad-hoc-ness of the bailouts, they would have said you were nuts. And I would not underestimate the creativity of the powers that be in preserving the privileges of the banking classes at the expense of the rest of us.

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39 comments

  1. RueTheDay

    I’m not sure how this would work exactly, since typically a good bank/bad bank split happens as part of a seizure or nationalization in preparation for a re-privatization. Is the idea that BoA would continue to conduct business normally as a private company while the bad bank is being hived off? If so, I don’t see how that’s possible.

    According to Bloomberg, roughly half, yes, HALF of BoA’s mortgages would go into the bad bank:

    http://www.bloomberg.com/news/2011-03-08/bofa-segregates-almost-half-its-mortgages-into-bad-bank-under-laughlin.html

    Given their current capital levels and the percentage of their assets represented by mortgages, this would almost certainly make them instantly insolvent. Who is buying this bad bank and for how much? What happens to existing shareholders? Bondholders? Will BoA somehow raise new capital as part of this arrangement? I don’t see this working unless the government injects a substantial amount of new capital into the good bank as part of the process. Maybe I’m missing something?

    1. RueTheDay

      It would seem that the “half of all mortgages” and $1 Trillion in value includes loans that BoA services but does not own. That distorts the case significantly.

      1. Cedric Regula

        I’m confused too, but that’s normal.

        One thing is back when BofA was testifying in one of the many hearings, a BofA rep, with a pained look on her face, stated that BofA had only originated 5% of the loans it serviced. Thinking back on it, I think it’s possible she was excluding countrywide originations that countrywide held on the books instead of securitizing, but no one asked for clarification at the time and it took me until now to wonder about it.

        The second thing is oftentimes both Yves and Whalen have pointed out the large book BofA does hold of second mortgages and home equity loans. These are carried at near full value, even tho everyone knows they must be written down to zero in the case the first loan is foreclosed on.

        So in light of the above, just what is that trillion composed of? As a corollary could the “good bank” still hold those juicy home equity loans? I wouldn’t rule anything out at this point.

        1. Paul Tioxon

          The actual day to day operations of the entire residential mortgage business was the sum total of loans originated from independent sales organizations composed of none bank affiliated mortgage brokers. This could mean a one man shop that did loan originations, package the docs to be sent to a CountryWide loan center by over night mail. 65% to as high 80% of all loans in the USA originated from MORTGAGE BROKERS, NOT MORTGAGE BANKERS, OR MORTGAGE COMPANIES.

          http://www.ftc.gov/be/seminardocs/0405elliehausen.pdf

          CountryWide biggest business was as a wholesaler, with an army of ISOs populated with people with state mortgage broker licenses. In many state, all that was required was the filing of some papers, that essentially proved that you were alive. Of course, that has all since changed, but in the day, you could find dishwashers and supermarket checkout girls sitting in boiler rooms, telemarketing incessantly about how you could save money by debt consolidation and walk away with a boat load of cash at the settlement table.

          The same was true for other outfits, conventional, subprime, it did not matter, the mortgage brokers were hounded by whole sale reps, who would support any kind of loan that would walk in the front door of your office. The mortgage brokers were a virtual corporation of the banking industry that you did not have to hire, fire or train and retain. No unemployment insurance, no other benefits, no brick and motor, no travel and cell phone allowance, the perfect workforce.

  2. Richard

    Great post, Yves.

    So, what we have is B of A “transferring” the mortgage liabilities to the bad bank and trying to build a legal defense to protect the $30+ billion they claim they rest of the organization will earn from going to investors and homeowners they defrauded.

    Your guess that this is a purely legal solution aimed at gaming the lawsuits is undoubtedly correct. The CEO is a lawyer who insiders say has no idea how to run a bank.

    1. Yves Smith Post author

      Except I’d expect this to be a separate legal entity. The people who follow BofA don’t see this but I think if things got more dire, the bank could start moving in the direction indicated above.

      1. Richard

        While it was not a separate legal entity yesterday, that does not guarantee that it is not a separate legal entity before the next quarterly report.

        I need some help here, but I recall that there was special accounting treatment for discontinued operations. Bad bank would seem like a candidate for this.

        If not, I would expect them to set up the legal entity under the holding company – parallel what Citi did with the businesses that it is shedding.

        Finally, the CEO is a lawyer. As you pointed out, investors are sitting on some claims that could be awfully expensive for B of A. What do you think would be the tactical steps to try to seal all the investors’ claims into the bad bank? Can it be done?

  3. Paul

    Seeing that it is not a separate legal entity, my guess is that this is to put a spin on quarterly earnings numbers. I could see Bank of America reporting a GAAP loss but then also showing “Net Income ex Legacy Assets”. Many firms have used the Legacy Assets model to try to show that their core business model is healthy or thriving despite outsizes losses at one unit. They can do this without ever making the Legacy Assets into a separate business and divesting it.

    1. ScottS

      Right, it’s an accounting dodge, a hedge against resolution (of the good parts), and I believe a way of sugar-coating the inevitable write-down of second mortgages.

      If they dump all the seconds in the “bad” BofA, then they can slowly write them down and paint it as improvement.

      “See?! Our bad assets are less this quarter, therefore we are better off!”

      And it’s PR, because saying “nothing to see here” only fools the public. Institutional investors are mildly more intelligent, and want to see *something* done, so they can honestly say “fool me once, shame on you” and go back to being overpaid for wrecking pensions with plausible deniability.

  4. Yearning to Learn

    What continually amazes me is that people continue to invest in these things.
    I REALLY need help understanding this.

    Investor invests in bank
    bank misrepesents itsefl and tanks
    bank diverts a lot of investor dividends/etc into bank bonus pool.
    bank plays dirty accounting shenanigans.

    investor invests more in bank.

    1. wunsacon

      In cases where the write-down isn’t enormous, I strongly suspect collusion — that any “investor” who puts money in does so because of some reward promised outside the boundaries of the contract.

  5. Brick

    When I first read this I thought it was about making the balance sheet look better, rather like Barclays tried to do, but the regulator would have none of it. Then I thought perhaps this is all about who gets to pay the litigation costs for all the mess they have made of servicing. Reading through the blurb provided confirmed that suspicion. Maybe they have worked out a way for some of the big fines coming down the road to be foosted off onto the investor or more specifically the taxpayer through the agencies. If that is the case then you have to ask why haven’t other banks done the same. Perhaps not upsetting hedge funds, investors, other banks and the agencies might have more value to some banks than others and BofA is the new Bear Stearns.
    I am not sure that adds up either, and perhaps it really is about getting one team to get their servicing act together going forward and another team to focus on sorting out the residual mess. I think if I had a mortgage with them I would be thinking about refinancing if that was the case. Somehow I still think it either saves them money or lets them use more leverage, I just have not figured out how yet.

  6. ella

    Is this a form of cooking the books? Is BofA still liable for the losses? Just wondering?

  7. Intermittent Lurk

    I’ve got a view less doomsday and more Wall Street: they are going to unload the toxic crap. Timeframe? 36 months. In short, they are going to set up a separate default servicing op, and once they have books on it, they are going to try and sell it. They don’t want the exposure anymore and are hoping a greater fool exists.

    1. Vanis

      Greater fool? How about the US Taxpayer.
      Govt takeover/bailout of the bad bank would fit nicely
      into QE3 methinks.

  8. Wrath Zed

    Constant, relentless embrace (masked as criticism) of authority (agencies), the reporting suggests some kind of oppositional force within our Gov’mint is going to “crack down” to make everything ok. Go back 10-20 years and this reporting is either:
    A symptom of denial motivated by [this is the way you're supposed to supply the News Inc. to make $]
    A total lapse of sanity, purely to provide the illusion that authority is still legitimate after the continuing carnage.
    That seething stench is how the New Jork Times spreads propoganda. The plot is always the same – there are checks and balances in our Great Nation, when the opposite is true, but the illusion must be preserved.
    ‘Oooo, Dodd-Frank willl straighten out the Mafia!’
    Who works at the FDIC or the Treasury? Holy mother of God – beat me in the side of the head with a rubber truncheon!
    Another thing – most breathing humans know that the AG in their states largely doesn’t give a sh$t about blatant fraud, and where they take their marching orders from. The average bloke has an even lower opinion of Chris Dodd and his corrupted ilk. Wake the f#$k up!

  9. rps

    “Texas banks that went bust in the 1980s used “good bank/bad bank” structures… The Resolution Trust(RTC) Corporation, the workout vehicle in the savings and loan crisis, was effectively a really big bad bank. The FDIC… forced to go…to Congress and get funding…”

    Prior to the RTC, the FSLIC and FHLBB due to the S&L crises became insolvent knocking at the taxpayers door several times to recapitalize. Due to insolvency, the FSLIC and FHLBB operations were eventually umbrellaed by FDIC.

    Wiki, “In the 1980s, during the savings and loan crisis, the FSLIC became insolvent. It was recapitalized with taxpayer money several times, with $15 billion in 1986 and $10.75 billion in 1987. However, by 1989 it was insolvent to save and was abolished along with the FHLBB; and the FSLIC savings and loan deposit insurance responsibility was transferred to the FDIC.” RTC came afterwards

    BOA’s good/bad bank model is the newest test driver. The psychiartic term is Dissociative Identity Disorder (or multiple personality disorder). If DID/SYBIL/EVE is successful the TBTF’s will be queued as their toxic financial deadweights will be hauled outta the trunk and dumped into the taxpayer landfills. Unlike the mafia’s 2:00am dump, the TBTF’s will unload the trunks in broad daylight with Timmay running the bulldozer.

    This all appears to be Enronesque deja vu and the nefarious methods of applying fraudulent off-balance sheet structures/SPE’s.

  10. sven

    This is fairly common in financial reporting circles. Wells Fargo does something similar with their “Non-Strategic and Liquidating Loan Portfolios”.

  11. MichaelC

    Establishing the bad bank is an opening move, but it looks like a Mexican bailout solution is in the cards, Ie. separately capitalize the bad bank with gov’t guaranteed debt.

    Hard to say what the plan is but the options you describe all sound plausible.

    What caught my eye was that the bad bank is designed to accept deteriorating assets from the good bank over time. Will legacy Merrill CDO assets qualify for BoAs bad bank?

    I assume as problems continue to mount as servicer and title issues work their way through the courts the banks are going to segregate these liabilities first, then look for govt support/guarantees to offload the pieces of the bad bank.

    Operative Resolution rather than stated Resolution.

  12. kravitz

    While talking with my financial advisor earlier this month, I noticed none of the funds in my portfolio directly invest in BofA. Of the US TBTFs, it’s the only one – ahem – missing.

  13. KnotRP

    Here’s why:

    1) The good bank will now explain that they should
    be paying good bonuses, because…well…because
    they are a good bank…well, duh! The bad bank is
    over there….go bitch at them.
    Good bank “taxpayer problem”.

    2) The bad CEO gets to stay with the good bank
    in the long run, and gets to dump the bad bank onto
    a taxpayer funded resolution authority, so this CEO
    move leads to his butterfly-like transformation into
    a good CEO. Funny how the butterfly looks more like
    a moth that might eat everything you are wearing, nes pa?

  14. KnotRP

    Curses…html ate my arrows…

    Good bank == “winning”
    Bad bank == “taxpayer problem”

  15. cc

    I’ve been contemplating for a long time…

    Where does one put their savings acct?

    BofA is likely the worst but the other ‘big 4′ seem not much better. Regional bank ….er…they are folding all the time…

    Credit Union? In Arizona I have some funds there but they all have problems with their real estate portfolios.

    Any thoughts?

    1. Paul

      You are a nutjob if you don’t think that FDIC insurance is money good.

      Put your money in any back and it is backed by the full faith and credit of the U.S. Federal Govt (up to 250,000). If the full faith and credit of the U.S. Government is no good, then how much green paper you have really won’t matter.

      1. rps

        Undoubtedly what the Zimbabwean government said about their currency. Paul you’ve gone off the rails in your over-reaction of a mattress joke. I’m wondering if your employer is the Fed Res., or US Treasury? What impact do you think The bernake’s QE2 onto QE3 has on the dollar. CC aught to consider investing in wheelbarrows?!

  16. Mildred Wilkins

    I am just saying . . . .

    If you are not comfortable using any of the above referenced savings institutions (Sealy, Simmons Serta, etc) be sure to used extgra heavy plastic then enclose in a glass container and for goodness sake don’t mark the spot in the yard so even a blind man can find it.

    P. S.

    If you have early onset Alheimer’s this is NOT a good plan.

    Seriously, you should not assume ANY institution is totally safe. For the first time ever, the broke folk (which includes me) truly are in just as strong a position as the folk who have money.

    All any of us have is what we have right this minute. There are no guarantees in life.

    Brings a whole new meaning to “One day at a time”.

  17. BondsOfSteel

    In the Bad Bank/Good Bank model, doesn’t the Bad Bank own the Good Bank? All the bond/shareholder own the Bad Bank. That way when things blow up… everyone in the Good Bank keeps their job and the bond/shareholders end up with the scraps of the Bad Bank (including the Good Bank).

    1. ScottS

      It must, but I don’t see how — other than “getting out in front of” any WikiLeaks releases.

      That is, when the WikiLeaks are released, BofA can say “You ain’t got a problem. We’re already on the MFer already.”

      That’s a bit weak, though. There has to be more involved than that.

  18. Random Blowhard

    The only financial institution that is more broken that Bank Of America is Citigroup, both of them are insolvent pieces of shit that owe there continued existence to infinite free money and endless bailouts. Invest accordingly …

  19. thedukeofurl

    The idea of a good bank vs bad bank scenario is not new or revolutionary. The issue has been raised recently (beg. 2009) more than once. Here are a few links – four of these are Willem Buiter elaborating on his position.

    Hall & Woodward (Citicorp illus.):
    http://www.voxeu.org/index.php?q=node/3132

    Buiter:
    http://blogs.ft.com/maverecon/2009/01/the-good-bank-solution/

    http://blogs.ft.com/maverecon/2009/02/good-banknew-bank-vs-bad-bank-a-rare-example-of-a-no-brainer/

    http://online.wsj.com/article/SB123517593808837541.html

    http://blogs.ft.com/maverecon/2009/02/save-banking-not-the-bankers-or-the-banks-the-case-of-ing/

    Soros:
    http://online.wsj.com/article/SB123371182830346215.html

    Romer:
    http://online.wsj.com/article/SB123388681675555343.html

    All links are active at the time of this submission.

  20. Jammin11

    Brian Moynihan looks like hes on speed. Probably Coke. Probably both. Seriously? Good and bad banks? WTF.
    This is getting to be slapstick comedy.
    Something so fundamentally absurd and clearly designed to try to “manage the implosion” is barely worth trying to analyze for any thread of logical reasoning.
    Cmon America, you can do it! I know your tired and wounded, but you can roll over, get up out of your torpor and deal with your cracky little demi-gods BEFORE they run the whole land to fire and ruin. Ever seen Kill Bill? Its time America has a word with its own “Bill.”

    At this point, more than 5 years into this ongoing display of complete ineptitude and lack of connection with reality on behalf of these select few banks, America has yet to push to simply shut the doors and cannabalize all assets of these shoddy institutions that have failed. Too big to fail? HAHAHAHA!
    Oh contraire. They Are TOO BIG TO FUNCTION APPROPRIATELY.

    America, in all her glory… Pity to think it would wind up wrestling with a small minority of sociopaths who had somehow managed to perpetrate massive fraud and temporarily hijack the currency system. And pity to think that instead of in swift kung fu response, the lies and manipulations were prolonged in an effort to figure out how to do what needed to be done in the first place.
    Cull the fat. Redistribute the bounty. Thats all it takes. A simple short term decision to stop the perpetuation of havoc that some of these “business” individuals have constructed, take what theyve thus far been able to accrue, and give it back to the people they stole it from. Before something bigger forces justice to be restored. Something more unstoppable and even less manageable than the chaos the tweakers at bank of america and co have been able to reek.

  21. chris lahaie

    It is hard to beleive, well then again, not really hard to believe that BofA and all the other large banks are going to get away such criminality. The new congress is just like the old congress. All about the money and the banks have their hooks in the adminstration so the White House will push for going easy on the banks. It is so frustrating to see these clowns getting millions of dollars in bonuses and no repercussions. Bernie Madoff did not commit the crimes of the tbtf banks so where is the justice?

  22. TC

    This is a last gasp act of desperation at a time when nothing but propagation of grand illusions dominate a society rapidly growing restless of every appearance of scam whose perpetuation alone these illusions are meant to serve. This so-called “bad bank” can only become a behemoth at the alter of a physical breakdown crisis being administered via hyperinflationary bailout whose end is nowhere in sight.

    And now a prediction…

    1. The NYSE will meltdown before any nuclear reactor in Japan.

    2. B of A is finished.

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