Bank of America has just sold 400,000 lousy loans to none other than our old pal Fannie Mae. They decided recently that they were tired of having to tread water to deal with these loans and threw them to someone with deeper pockets.
Of course, they didn’t say it in quite those words. No, they used fancy expressions like “Our … transfer strategies directly support company goals … to divest certain non-strategic assets, and to continue to improve the company’s capital position by reducing holdings of capital-intensive assets.”
Wow, that’s a mouthful of hot air. What they mean is they’re losing money badly and finally got smart. What happens when a bank loses cash? They look bad and weak. So toss all the bad mortgages on Fannie Mae. What happens when Fannie loses cash? The Treasury dives in and throws more of our money at them. It’s win-win-lose (BofA-Fannie-Us).
Exciting times, aren’t they? Well, not to worry, guess how much confidence Fannie has that you and I have made a good investment in these loans. Not much, I’m afraid. Loans worth $73 billion were sold in one bundle for the grand sum of $500 million.
I’m heading for the hills. Anyone joining me? Would you take a gamble with taxpayer money on a nut-job adventure like this? I can’t believe what our government’s trying to pull on us, but each day is just one insanity bigger than the next.