Fed Lies On The Record To Protect Bank Of America, Pulls Testimony

Tyler Durden's picture

In late 2010, in a superficially stunning move, Bank of America was sued by, among many others, the New York Fed over the biggest bogeyman for the bank's balance sheet - its legacy portfolio of super toxic Countrywide mortgages it inherited in the worst M&A deal of all time (its purchase of CFC) and the inheritance of woefully inadequate mortgage issuance standards which ever since then (recall our prediction on this issue) has cost the bank billions in litigiation payments and reserves.  Obviously, the Fed had no concerns about collecting the money it itself creates, and it certainly doesn't care about legality and criminal financial impropriety, so why was it among the list of plaintiffs? Simple: as we suggested back then, and as has since been proven correct, it was simply so that Bill Dudley's henchmen have a first row view of everything going on in the putback litigation that has been the primary concern for BofA, but with a few of keeping the damage to a minimum. Sure enough, Ever since then the Fed has done everything in its power to mitigate potential losses to BofA as a result of Agent Orange selling hundreds of billions in biohazardous mortgages to anyone and anything with a pulse. It has gotten so bad that the Fed was last week caught lying under testimony, forcing the Fed to take back testimony in a parallel lawsuit between AIG and BofA, which has also involved the New York Fed, as a indirect guardian of BAC's cash hoard.

The WSJ reports:

The Federal Reserve Bank of New York is having some trouble getting its story straight. A New York Fed employee took back testimony he previously gave in a legal clash between American International Group Inc. and Bank of America Corp. over about $10 billion in mortgage-investment losses, according to the big insurer in its newest federal-court filing in a lawsuit seeking compensation.


The testimony is part of a long-running battle between AIG and Bank of America over losses the insurer incurred after purchasing troubled mortgage bonds underwritten by Countrywide Financial Corp. and Merrill Lynch & Co., now part of the Charlotte, N.C., bank. The primary legal battle has been sidetracked by a dispute over who has the right to sue Bank of America.


AIG says it does. But the bank claims AIG gave up its rights to sue when it accepted a bailout by the New York Fed, which purchased the troubled securities in 2008 through a vehicle called Maiden Lane II.


To help decide the dispute, AIG and Bank of America have sought depositions from New York Fed employees who were involved in the bailout.


Bank of America previously cited December 2012 testimony from James Mahoney, one of the New York Fed's lead negotiators on the Maiden Lane II deal.


Mr. Mahoney said that when the Fed bailed out AIG, it intended to receive the rights to all future legal claims.


But on March 18, Mr. Mahoney told AIG's lawyers: "I was really just concerned about moving all the upside and recourse over to the Fed. I didn't contemplate taking something away."


He also said he never discussed with anyone the idea that "AIG was somehow giving up its [tort] claims."


Mr. Mahoney explained the discrepancy in his testimony by saying he spent "less than 10 minutes" discussing a document prepared by Bank of America that asserted AIG had given up all legal claims in the bailout.

Fine, so Bank of America must have legal obligations to the Fed if it has been released of all claims toward AIG right? Wrong.

To settle a separate matter, Bank of America agreed to pay the New York Fed $43 million in exchange for the Fed dropping all legal claims against the bank.

A "massive" $43 million to absolve the bank of any wrongdoing relating to $10 billion in bonds? Some things crony capitalism can't buy: for everything else there's BailoutCard.

As for the Fed and Bank of America, complete the sentence: "when it gets serious, you have to [ ___ ]"

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Schmuck Raker's picture

"when it gets serious, you have to [ ___ ]"

Burn it to the ground?

Popo's picture

"when it gets serious, you have to [ ___ ]"

Become an expat?

Forty Six and 2's picture

"when it gets serious, you have to [____]"

do coke and hookers?

BoNeSxxx's picture

Things are getting good when TPTB begin to feed on themselves...  

smlbizman's picture

when it gets serious.....

take all your paper assests out of the bank 2-3 yrs ago, buy real assets sit back and watch the rest of the sheep get sheered...did i win???...

DoChenRollingBearing's picture

I am shocked, SHOCKED that lying was going on here...

McMolotov's picture

The Fed doesn't lie, it simply creates new "truth" out of thin air.

ParkAveFlasher's picture

They do lie, and they need to be arrested. 

Now, who to arrest the Fed, that is not actually within the Fed's network of fund disbursement....this guy?


fonzannoon's picture

Didn't Andrew something Sorkin cover this in his book "too big to fit in my ass"?

smlbizman's picture

they now have officially adopted (again)the george castanza mantra of lying...

yogibear's picture

Like skiitle pooping unicorns are real for the banksters.

FieldingMellish's picture

I call it, "Pulling a Junker".

Cursive's picture


When the truth is too ugly, only a lie can be pretty.

neidermeyer's picture

I win , my house was in a CUSIP AIG paid out on ,,, PAID IN FULL BITCHEZ ,,, Maiden Lane 2 can kiss my QT suit.

chunga's picture

So going forward AIG would be an indispensable party to any future litigation.

Hunter S. Thompson's picture

Building a House of Lies always ends well

OpenEyes's picture

Fed Lies...


Pretty much could have stopped right there.

MarsInScorpio's picture

Can you go into court, perjure yourself, then pull your testimony to avoid prosecution for your perjury?


You can if you are Too Big To Jail (TBTJ).


Exactly how much more criminal corruption does it take to convice people that this is a dying economic order . . . ?


Winston Churchill's picture

TBTJ l do it all the time in county courts.When caught out,

they simply dismiss and refile the case without the lies.

Justus at its best.

Mr. Saxby's picture

Exactly how much more criminal corruption does it take to convice people that this is a dying economic order . . . ?

So long as Dancing with the Stars and Cramer are on the teevee, these fucking imbeciles will bend over right up to the point when they turn the lights out.

DeadFred's picture

"Exactly how much more criminal corruption does it take to convice people that this is a dying economic order . . . ?"

"I'll take 'infinity' for 200 points Alex"

Cursive's picture

@Jason T

What's a little perjury among friends?

Not Too Important's picture

What's $65 trillion in derivatives among friends? The deposits'll cover it. Oops, wait . . .

PontifexMaximus's picture

Bullish, at leat they told and tell you who are the masters, move on, for the past , the jew doesn't pay a dime....

Andy Lewis's picture

William Dudley's a Jew, huh?


Fuck off, you piece of shit.

Bay of Pigs's picture

The William Dudley?

Nice one Tyler...

monopoly's picture

I am sure this will be on the 6 PM headline news and all day on CNN. The truth will be broadcast for the citizens to see. 

Dollar Bill Hiccup's picture

The drool of law is alive and kicking in this great nation ...

skipjack's picture


So we cheated and we lied
And we tested
And we never failed to fail
It was the easiest thing to do.
You will survive being bested.


ParkAveFlasher's picture

Time to go on a boating trip with David Crosby.

buzzsaw99's picture

When it's bad you have to lie. Fuck CONgreff, they don't want nor do they deserve the truth as they themselves are lying thieving accomplices in the great kleptocracy. Stupid cunts, they'd sell their mother for a campaign contribution.


the fed lies to help bac, to help buffett, to help mozilo, to help paulson, to help...

Peter Pan's picture

Like I keep saying, Americans used to have the nerve to even shoot their presidents and now they can't even take care of one scummy banker.

What's happened to them? Or have they just become hobby gun collectors?

ebworthen's picture

The FED is a criminal organization that makes the Sheriff of Notingham look like a Saint.

One of We's picture

"when it gets serious, you have to [ Get to work Bernanke!].

Print us some dough or we'll have to Corzine some deposits to pay this lousy $43 million!

Motorhead's picture

Isn't the USA such a wonderful country?  Just so full of integrity and righteousness. 

No wonder each year the US[S]A continues to slide in the rankings of economic freedom.

darkpool2's picture

and the message this sends to the rest of us, is ???

( oh, you all already learned that message a long time ago ?......you mean NOTHING is the truth these days.....everything is just spin and lies??......really?.......crap, I must be last person standing, silly me )


economessed's picture

It's a big club, and you ain't in it.

vulcanraven's picture

One thing Carlin got wrong.... it's actually a SMALL club.

eddiebe's picture

"..when it gets serious you haver to": buy a few representatives and judges.

flacorps's picture

Bernanke lied,

Lawsuits died...

Who was dumb enough to expect any different?

Atlantis Consigliore's picture

ur ur ur ur UR Honor, May it Please the Whores? Congress rented by the hour w/ the regulatwhores.

wheres my deposits? MF ....er....s

Shizzmoney's picture


"when it gets serious, you have to [ ___ ]"


Look what happened when Dylan Ratigan requested the FOMC minutes from around when the crisis started to begin.  Over 90 pages.  81 of them are 85% or more redacted.

The only major decision we found out that Bernanke made in March of 2008 (when the market was diving) was that he ordered the Chicken Cobb Salad for lunch.

short screwed's picture

 At least Angelo Mozilo is rotting in prison with Corzine....

MayIMommaDogFace2theBananaPatch's picture

i dreamt that a couple of times  -- it was very pleasant