1 traunch of sub-prime mortgage loans: 350 million dollars
1 credit default swap on traunch of sub-prime loans: 22 million dollars
Having US Taxpayers subsidize $40 Billion of your settlement with the US gov't over mortgage fraud....
PRICELESS (ok...maybe we could put a $40B price-tag on it)
The FT reports tonight that US taxpayers are expected to subsidize the $40B settlement with BOA, The Morgue, Wells Fargo, Citi, and Ally by allowing the banks to count future loan modifications towards their restructuring obligations for the new settlement.
Ok, so let's put this in layman's terms. The 5 US banks have agreed to settle their claims by modifying loans in danger of default and counting the mods as payment for their settlement. Mods that would be in default and end up netting the banks ZERO without a significant modification. So the banks are settling their fraud charges by allowing US taxpayers to pay for loan modifications to prevent more defaults, further negatively impacting the banks.
This is like paying your neighbor for the privilege of receiving a discount to watch him bang your wife in the future.
US taxpayers are expected to subsidize the $40bn settlement owed by five leading banks over allegations that they systematically abused borrowers in pursuit of improper home seizures, the Financial Times has learnt.
The deal, agreed last week, calls for Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial to pay about $5bn in cash fines and to reduce monthly payments and loan balances for distressed US borrowers by as much as about $35bn.
However, a clause in the provisional agreement – which has not been made public – allows the banks to count future loan modifications made under a 2009 foreclosure-prevention initiative towards their restructuring obligations for the new settlement, according to people familiar with the matter. The existing $30bn initiative, the Home Affordable Modification Programme (Hamp), provides taxpayer funds as an incentive to banks, third party investors and troubled borrowers to arrange loan modifications.
Neil Barofsky, a Democrat and the former special inspector-general of the troubled asset relief programme, described this clause as “scandalous”.
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