Bank of America Provisions $1 Billion For Reps & Warranties Liability In Q1 As Claims Jump By $2.9 Billion, Pays Monoline AGO $1.1 Billion To Settle

Tyler Durden's picture

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Duuude's picture

2nd Witch:
By the pricking of my thumbs,
Something wicked this way comes. [Knocking]
Open locks,
Whoever knocks!
[Enter Macbeth]

How now, you secret, black, and midnight hags!
What is't you do?

Macbeth Act 4, scene 1, 44–49

After conjuring up "double, double toil and trouble" [see p. 32], the three witches admit a visitor to their cave—King Macbeth of Scotland. "Something wicked this way comes," indeed, and they're delighted. Macbeth—at least, the wicked Macbeth—is in part their own creation. The first time around, they came looking for him, to deliver the enticing prophecy that set off the whole chain of events which has included Macbeth's regicide and subsequent bloody events. Now, Macbeth comes looking for them, and the witches summon apparitions to tell Macbeth exactly what he wants to hear: that he's invulnerable. This news is purposely ambiguous; it is calculated only to make Macbeth act more wickedly before he is finally finished off.

The Axe's picture

Christ what great work TYler!!!!   upgrades probably coming on BAC...crazy world...No one calls it a pig...a dead pig...

Cursive's picture

Crazy that BAC's price can levitate up the way it has, but it's going to zero.

Flounder's picture

Hey, the analyst just up on Boomberg said BAC is a speculative buy.  So its got that going for it, which is nice.


Dick Darlington's picture

Hearing Morgan Stanley property fund missed a 3,3 billion debt payment and handed over the keys of an office building in Tokyo.

M.B. Drapier's picture

Also someone please explain to us how Merrill Lynch (see footnote 2) is one of the parties responsible for filing new claims against its parent and rescuer Bank of America.

It must suit BoA just fine to have a man on the inside? And if the claimants end up sharing a limited pool of compensation, then BoA will claw some of it back as Merrill's share? Not A Lawyer.

Trader Joe's picture

Holy smokes!

BAC just kinda dumped CFO Chuck Noski (who I worked under back in the day)

Chuck is as straight-laced as they come -- he's a no-bullshit guy that has never and will never fudge accounting or reporting, and he knows his shit up, down and sideways

Bottomline, this guys integrity is gold-plated

Which is why I was very confused as to why he would even think about working for a"banksta"

Well, obviously that little end run they did a few weeks back not telling him about the FED rejection of the divi, etc. pissed him off

So now they have him taking a position in Cali  (where he has always lived - he does the G-5 commute) to work in their mortgage area, something about his daughter graduating high school, personnel reasons, yada yada yada -- WTF!

This tells me one thing, BAC IS F**KED and that Noski has figured that out and wants OUT -- he has only been in the position for one year, and I guess that was enough

It also tells me that BAC may need to be bailed out again in some manner again in the future 

Seasmoke's picture

the worthless HELOC they hold , will be the final nail in the coffin .....short them to zero

Cdad's picture

Oooops...well, there you go.  Right before his shift ended....Joe Kernen sums up the whole Blight on America bank thing, "Bank of America called higher."

There you go.  Done.  Never mind about a completely bogus earnings report by the world's largest bank.  Just grasp the hopium pipe, sell your physical silver, and buy shares of BAC.  Done.  Easy. more stress about collapsing home values, banker crimes, puppet shows, Unicorn meat processing, asteroids...all gone.

Listen to the Kernen.....

JerseyGuy's picture

Wait...wha??? BAC will backstop and loss-share with AGO until cumulative losses hit $6.6 billion.  But AGO says the 21 1st Lien and 8 2nd lien deals have an outstanding par balance of only $5.2 billion.  Is that right, has BAC taken over 100% exposure?? Chris Whalen is fond of pointing out that the MIs are NOT insurers and are clearly insolvent given their respective exxposures.  But since the originators got downright pathologically deceitful in the origination process, and have R&W liability, perhaps this settlement is evidence that the MI escape hatch was supplied by Angelo and his crowd of dirty pirate loan officers.  Gotta hand it to you though, parsing the AGO settlement and applying the same terms to the much larger GSE potential claims puts BAC in need of bailout 2.0


Careless Whisper's picture

Also someone please explain to us how Merrill Lynch (see footnote 2) is one of the parties responsible for filing new claims against its parent and rescuer Bank of America.

now B of A is a "cutter".

  1. People who cut themselves sometimes also suffer from other mental health issues such as bipolar disorder, obsessive-compulsive disorder, depression, eating disorders or other challenges, though this is not always the case.
JerseyGuy's picture


The bank settled representation and warranty claims on troubled residential mortgage-backed securities with monoline insurer Assured Guaranty for $1.6 billion. The remaining principal balance on these severely delinquent loans totaled $10.9 billion.

The settlement covered 21 first-lien RMBS trusts and eight second-lien trusts.

Seems that the 29 deals covered under the settlement had $10.9 bn oustanding, which makes more sense if BAC is covering losses up to $6.6 bn.  But still, holy shit, 67% cumulative losses before BAC hits a release point?? And this is R&W liability.  Just how much of the pool violated the original R&Ws?  100%?  Jesus H. did anyone actually do their damn job originating loans between 2005-2007??  As a guy who was nipple deep in non-agency MBS from 2003-2010, I am friggin disgusted.  I kinda suspected that corners were cut, sometimes pretty deepy cut, but I never would have thought entire vintages were so horribly impaired by origination impropriaties and paperwork problems.  F'em all.  No one deserves saving.

Eyes on the World's picture

If anyone is still reading this post, I've written a piece over at my blog on this very topic whilst including a link back here.  I'm a newbie in the whole game and a new writer that's attempting to put down in words with humor what the hell is going on in a manner and language "regular folks" can understand.  I would appreciate any reads on it and my blog in general - not trying to promote, just looking for opinions.  Thanks, EOTW