While we frequently make fun at Maxine Waters, and often for good reason, in this case the Congressional Democrat is spot on: the member of the House Financial Services Committee has denounced the BofA-GSE settlement as nothing more than a "backdoor bailout" funded by taxpayers, precisely as disclosed yesterday in the exhaustive Forbes piece that is a must read.
From a just released statement.
Congresswoman Maxine Waters, a senior Democrat on the House Financial Services Committee, issued the following statement today after Bank of America settled with Fannie Mae and Freddie Mac for $2.8 billion over the misrepresentation of loans that the bank originally sold to the GSEs:
“I’m concerned that the settlement between Fannie Mae, Freddie Mac and Bank of America over misrepresentations in the mortgages BofA originated may amount to a backdoor bailout that props up the bank at the expense of taxpayers. Given the strong repurchase rights built into Fannie Mae and Freddie Mac’s contracts with banks, and the recent court setback for Bank of America in similar litigation with a private insurer, I’m fearful that this settlement may have been both premature and a giveaway. The fact that Bank of America’s stock surged after this deal was announced only serves to fuel my suspicion that this settlement was merely a slap on the wrist that sets a bad example for other negotiations in the future.
I understand that the questions raised by fraudulent servicing practices were not addressed in these settlements, and I hope that Fannie Mae and Freddie Mac, along with their conservator, are more aggressive in pursuing banks for the fraud I documented in my Subcommittee during the last Congress.”
Zero Hedge also hopes that formerly disgraced BofA GC Tim Mayopolous unrecuse himself (we have no idea how on earth that is possible), and if he will not or refuses to, then he should immediately vacate the post which he took after being fired from precisely the same position at Bank of America. At least there his duty dereliction would confine damages to the firm's sad shareholders. Now that he is at Fannie, taxpayers simply refuse to have this "counsel" represent them if he will not pursue taxpayer interests to the fullest extent, which at the end of the day amount to trillions of dollars. And certainly, Mayopoulos should immediately see his annual compensation cut dramatically from his existing run-rate of $3 million - an amount henceforth collected for reasons unknown.