Two years ago, Ken Lewis decided to scapegoat then General Counsel (and incidentally the guy who just happens to know more about BofA's dirty laundry than almost anyone else in the world, most certainly including Julian Assange - and that two year non-disparagement clause is pretty much over...) Tim Mayopoulos for no reason whatsoever, resulting in the termination of the latter without cause. Subsequently, we learned that this action was taken purely to prevent then head of Investment Banking at the world's laughing stock of a C-grade investment bank, and current CEO, Brian Moynahan, from going somewhere (rumor has it the 4th Bangalore Bank of Junk Bond underwriting had expressed a preliminary interest, and even provided a $0.69 retention bonus). Subsequently, Mayopoulos ended up as GC at perpetually insolvent GSE Fannie Mae. And since then, the bad blood has been flowing, most recently involving the dust up between the GSEs which have been demanding legal action against the zombie mortgage lender (BofA for the cheap seats) accusing it of Reps and Warranties breaches (and as the recent filing by Allstate showed, there sure are many of those). And this is just the beginning. As of a few minutes ago, we have learned that Fannie and its scorned GC just scored another victory against that other just-as-insolvent organization.
Per Bloomberg, Bank of America Corp. said it will take a $2 billion impairment charge on home loans and insurance and a $3 billion provision for repurchase obligations to government sponsored entities Freddie Mac and Fannie Mae. Oddly enough this is precisely in tune with what Zero Hedge predicted three months earlier, namely that BofA's massive underreserving will mean a surge in charges and write offs as the bank scrambles to reconcile its insolvent books with reality.
In the meantime. expect to see the animosity between Fannie and BofA get real over the next year as the fraudclosure scandal, and lawsuits like the most recent one by Allstate, keep dropping new hints of massive fraud and as Mayopoulos continues acting (righ
As a reminder, here is a chart showing Bank of America's indicative underreserved status: