At some point these banks are going to owe the people they ripped off some big bucks. But right now it is too labor intensive for local lawyers in bankruptcy courts to go through the payment history and ferret out the fees.

I have done some contract software/admin work here (ABQ) as part of a multi-bank data center, the purpose of which is to trace VRM paper/bonds (etc.) downstream so as to give these guys definitive information needed to determine who owns what, who holds paper (in many cases, they don’t know), locate liabilities etc. etc. All the national banks w/local presence are involved (save BofA), as are many large local & state.

My work involved pulling downstream data from many locations, designing database to mange it all, and pull it all together. My work for only one of ‘em (14 involved AFAIK), the others had either in house or contract techies doing the same. I also ended up implementing middle-ware (MW) that tied it all together.

This thing 1st went online last week of Aug., ‘07. It has been torn down twice since then and re-started from scratch because each iteration has fallen far short of fulfilling intended goal. I’m out of it (they didn’t pay me), but I’ve heard through grapevine it’s still unworkable.

I’ve watched closely… very closely. This thing is far more insidious than the coverage it’s received IMO, even from “respected” financial rags. It looks to me like Enron all over again:

a) create “entities” to “guarantee” (insurance) paper, backed only by other WS “investment” banks similar worthless paper.
b) move bad debt of the books (voila… it doesn’t exist!) into a)
c) and like Enron, pretend it’s manageable until every last $$ is sucked out’a there and moved out of US banking system. “Ooops, so sorry, can’t imagine how that happened.”

Rick Winter has a wonderfully schizophrenic article up. The first part was evidently written before today’s announcement. It is a cool discussion of the whys and wherefores of a possible BoA/CFC deal, some of the ramifications for FHLB, etc. Then there’s an “Oh no, not really!” sequel written in the harsh light of reality. (Not that the evaluation is at all different in the two halves.)

I do not expect the rubber to ever meet the road on this deal. I would guess CFC true value as this plays out at negative $50 billion. For example how much of $52 billion in HELOCs will be recovered? Here is a brief summary of the nasty toxic assets Country Fried holds, read ‘em and weep. This facade of a transaction is a complete insult to the intelligence unless some Milky Way space ship has been concocted to hide these.

The summary that follows describes $135 billion of sketchy sounding “assets” that would belong to BoA if this thing goes through, including over $30b of mortgages that Fannie & Freddie, the agencies, won’t touch under present rules. It’s still something of a mystery why this deal is happening in a big lump and not in a sort of staged breakup.

There’s a saying in banking circles; If you borrow a little, you’re still just a borrower but if you borrow a LOT, then you’re a partner.

Or “if you owe the bank $100, the bank owns you; if you owe it $100m, you own the bank.”

I think it’s fair to say here that Countrywide ‘owned the bank’, albeit indirectly. If it went tits-up, the autopsy would show that the plague was running rampant.

On the story, I just got here and have nothing to say that wasn’t said very well by Prof. Foland and grayslady in particular. Iow, there’s a lot of risk to other big institutions, including some of the gov. rescuers like FHLB, that goes into being “too big to fail.”

Other small thing is that loans that Fannie and Freddie bought from CFC (and everyone else) met the normal old credit standards that generally ensure a bunch of loans will perform well at a high rate. The ugly stuff either stayed on CFC’s own books or was sold into the various mortgage-backed securities that are causing other investment companies so much agita, so as long as the rules for what F&F can buy stay the same, they are not at increased risk.

the guy who built the shitpile floats away in a golden parachute.

PD: Grrrrrrrrr!!!!

It parallels to a T.

I don’t mean to rant, but I just don’t think the whole story is out yet.

BofA just realized that Countrywide was a partner and they just decided to terminate their partner and take over.