2nd September 2011, 07:45 PM
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Sachin Asher
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Join Date: Sep 2006
Location: Vadodara
Posts: 8,636
Rep Power: 383
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Banking Worries Resurface in US
More than a dozen big US banks are going to be sued by the mortgage regulator in US.
The banks are being accused of misrepresenting the quality of mortgages that they sold to investors.
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The agency that oversees mortgage markets is preparing to file suit against more than a dozen big banks, accusing them of misrepresenting the quality of mortgages they packaged and sold during the housing bubble, The New York Times reported on Thursday.
The Federal Housing Finance Agency, which oversees mortgage giants Fannie Mae and Freddie Mac, is expected to file suit against Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, among other banks, the Times reported, citing three unidentified individuals briefed on the matter.
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U.S. to sue big banks over mortgage securities: report - Yahoo! Finance
The Federal Reserve has asked Bank of America if it has any contingency plans to follow if economic conditions worsen in US.
Obviously, The Federal Reserve is worried about the capital adequacy of Bank of America.
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The Federal Reserve has asked Bank of America Corp to show what measures it could take if business conditions worsen, the Wall Street Journal said, citing people familiar with the situation.
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Fed asks BofA to list contingency plan: report | Reuters
Analysts believe that Bank of America is extremely over-optimistic about quality of its loan portfolio.
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In other words, the analyst thinks that 35% or more of Bank of America's loans might end up going into default, versus the 5% the bank says are in default today.
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And this is only Bank of America's residential loans were talking about--we haven't even gotten to the commercial real-estate loans, consumer credit loans, European exposure, derivatives, and other exposures on the company's $2.2 trillion balance sheet. Or the potentially enormous liabilities associated with the mortgage-underwriting behavior of Bank of America's subsidiary Countrywide, for which the company seems to be hit with a new lawsuit every other day.
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Here’s The Bomb That Might Blow A Hole In Bank Of America |
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