Bank of America Facing 3 Mortgage-Bond Sales Probes

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Oct. 22 (Bloomberg) -- Bloomberg News’ Keri Geiger and Paul Miller of FBR Capital Markets discuss Bank of America facing three more civil probes by the Justice Department involving sales of mortgage-backed securities. They speak on Bloomberg Television’s “Market Makers.”

To the suit in august.

Looking at the way bank of america has sold mortgage-backed securities to other financial institutions, especially ones where the quality of the assets harm to the banks that bought the instrument.

They are being sued by whom.

Who gets paid in the settlement?

The department of justice.

How much similarity is there between what the doj is seeking from bank of america and what we are seeing play out with jpmorgan?

There is a lot of similarities.

The bank of america probe is looking at issues related to merrill lynch and countrywide, two organizations they acquire during the financial crisis.

A lot of jpmorgan's issues are also related to wamu and bear stearns, acquisitions they made.

Did bank of america not see this coming?

Jpmorgan took a 7.2 billion dollars charge for pretax litigation expenses.

Bofa, which reported a couple days later, they took only $1.1 billion of litigation expenses in its most recent quarter, what is going on?

Bofa thanks a lot of this is behind them.

They have paid the most that anyone.

They have settled with the fha, fannie, freddie, things that jpmorgan has yet to do.

These things just keep on coming.

We don't know when they are going to stop.

We don't know if the justice department will look at the same type of settlement at bofa as it did with jpmorgan.

It looks like they are.

Bank of america has a lot of reserves set aside.

It may get hit with something like a jpmorgan fine, they will have to take a big charge.

Bofa has not told us how much they have set aside.

Jpmorgan's disclosure was the first i have ever seen from a bank in terms of total reserves set aside for litigation.

We do know what some of the things are, but the overall number, we do not know.

Banks are afraid to give that out.

They are afraid to fight is exactly what the government will ask for.

Whether it is doj or regulation in general, does it feel like a shakedown of these banks?

Jamie dimon was asked that yesterday, he said no.

He has to say no, what is he going to say?

If he says yes, i am being shaken down, that will not bode well.

He is being instructed not to say that.

But what do you think?

We have are in that the government needs to stop this.

The government wants to pay because that is what mainstream -- main street wants.

By going after these banks five or six years after the crisis, you are tightening credit for the world.

The banks are afraid to lend long, they are afraid they will be soon -- sued five years down the road, that is dragging down the economy.

When you go to the government and the regulators, all they want is people to pay, that is what main street once.


You have to let banks lend, quit selling them for the same thing over and over again.

Keri, your reporting gives you some insight.

Is that what they have in mind, do prosecutors have to answer to main street?

Doesn't end with bofa, citi?

They are a little bit different from what we have seen, we can expect more of these for other banks.

They are looking at how banks sold securities to other banks.

Six years after the fact.

It has a 10 year statute of limitations.

We could continue seeing these with -- jpmorgan will settle, bank of america can settle or litigate, we could see them with other large lenders as well.

A tough road ahead.

This text has been automatically generated. It may not be 100% accurate.


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