What Does Wikileaks have on Bank of America?
WikiLeaks founder Julian Assange is promising to unleash a cache of secret documents from the hard drive of a U.S. megabank executive. In 2009, he told Computer World that the bank was Bank of America (BofA). In 2010 he told Forbes that the information was significant enough to "take down a bank or two," but that he needed time to lay out the information in a more user-friendly format.
Recent new reports suggest that BofA is now moving into high gear on damage control, creating a "war room" and buying up hundreds of derogatory Internet domain names including BankofAmericaSucks.com and BrianMoynihanblows.com (referring to BofA's Chief Executive Officer).
Before the big banks start calling for Assange’s internment at Guantanamo, the question worth considering is what does Wikileaks have on America’s largest bank?
Legal Liability for Toxic Mortgages
BofA is already under the gun, defending itself from multiple lawsuits from private investors as well as Fannie and Freddie demanding that the bank buy back billions worth of toxic mortgages-backed securities. The firm stopped issuing subprime mortgages in 2001, but it kept underwriting subprime mortgage-backed securities for many years. In September 2009, for example, BofA underwrote $239 million worth of securities backed by subprime loans. BofA has reserved a mere $4.4 billion for these "put back" lawsuits. If Assange has emails showing that top executives at BofA knew they were peddling toxic dreck to investors, it would rock the firm and give tremendous ammunition to the army of lawyers already knocking on BofA’s door.
Reckless and Illegal Foreclosures
BofA is at the heart of the robo-signing scandal and has wrongfully foreclosed on countless American families. One poor woman returned to a vacation home to find it locked, all her possessions gone -- including the ashes of her late husband. How could such a mistake be made? A BofA employee deposed in February 2010 said that she signed as many as 8,000 foreclosure documents a month without reviewing them, in violation of the law. Mounting questions about the fraudulent and illegal foreclosure practices at the big banks and mortgage service companies prompted BofA to temporarily halt foreclosures nationwide in October, 2010. If Wikileaks can document that top BofA officials have a callous disregard for legal processes and constitutionally protected property rights, BofA’s mounting legal liability may not be sustainable.
Headaches Left Over from Countrywide
In 2008, BofA acquired Countrywide, one of the most aggressive and fraudulent lenders during the housing bubble. The result has been a train wreck of liability and lawsuits for the megabank that now has over 1.3 million customers in foreclosure. To settle the lawsuits with Illinois, California and eight other states over predatory lending, BofA came up with an $8.4 billion loan relief plan for those holding Countrywide mortgages. In June, 2010 BofA paid $108 million to settle a Federal Trade Commission case that charged Countrywide with having extracted excessive fees out of borrowers facing foreclosure. BofA paid $600 million in August 2010 to settle shareholder claims that Countrywide had concealed the riskiness of its lending standards. There is no end in sight for these types of claims, and more. In June, 2010 the State of Illinois sued Countrywide again, this time over racial discrimination in its lending practices. Wikileaks could have further documentation of Countrywide’s illegal and reckless underwriting practices or ongoing fraud at BofA.
Illegal Bonuses Paid by Taxpayers
Bank of America acquired the brokerage firm Merrill Lynch for $50 billion in January 2009. The U.S. government blessed the merger with a $20 billion bailout loan to aid BofA. After the acquisition went through, it was revealed that Merrill Lynch had lost $15.8 billion in the last quarter of 2008 and that $3.6 billion in bonuses were paid ahead of schedule to top executives at Merrill. Among beneficiaries of the bonus bonanza was Merrill's CEO John Thain, who famously spent a million redecorating his office at the height of the crisis. About the deal New York Attorney General Andrew Cuomo said: "One disturbing question that must be answered is whether Merrill Lynch and Bank of America timed the bonuses in such a way as to force taxpayers to pay for them through the deal funding." If Wikileaks has emails showing top executives knowingly used bailout bucks for bonuses, this ugly chapter in history could be reopened, prompting Congressional investigations and further bailout backlash.
Still Too Big to Fail
In addition to the $25 billion in TARP bailout money and the $20 billion for purchasing Merrill, America recently learned of the extraordinary actions taken by the Federal Reserve to prop up BofA at the height of the crisis, details that were kept secret from the public. When the Fed was forced to release data about its emergency loan programs in December 2010, we found that BofA tapped an estimated $931 billion from the Fed in short term loans and government subsidies. If Wikileaks has information showing that America’s biggest bank is only being kept alive by accounting tricks and ongoing government subsidies, the result could be another government bailout or potentially the orderly dissolution of a firm that is "too big to fail" and still poses a threat to our nation’s economy.
"We Don’t Suck"
BofA doesn’t just want you to know that their CEO Brian Moynihan doesn’t suck, they want you to know that their top staff does not suck either. The bank has started buying damaging domain names for a long list of executives, prompting many to wonder: just what have those executives been up to over there at BofA?
Hopefully Wikileaks and Julian Assange will soon let us know.
* * * *
Learn more about America's biggest bank in the Sourcewatch profile of the bank.
Follow Us
Who Needs Wikileaks!?
Everyone is waiting for Wikileaks, but who needs Wikileaks with the writing on the wall? BofA has exposure to over $100B of GSE held MBSes, and over $300B to private investors. Most of this is through their reckless purchase of Countrywide. Add to that risky CDOs held by Merril Lynch, and BofA is a heartbeat away from collapse and FDIC takeover. The question is whether or not FDIC, left insolvent in the wake of 2009's bank failures, can really take conservatorship for the banking giant. It's like evacuating the Titanic with only a handful life boats. Oh, yeah, that's actually what Whitestar Line ended up doing, losing 2/3s of her passengers.
Much to BofA's pleasure (and to the relief of Wall Street in general), the 3rd of January Press Release was broadly interpreted that the GSE claims for toxic mortgage buy-backs has been mitigated, but read the language carefully:
"Through this provision, Bank of America BELIEVES that it has addressed its remaining exposure to repurchase obligations for residential mortgage loans sold directly to the GSEs. The calculation of the provision incorporates HISTORICAL EXPERIENCE with the GSEs and certain ASSUMPTIONS regarding economic conditions, home prices and other matters, and future provisions for representations and warranties may be affected if the actual results are different."
Soft terms like "believe" and "assumptions" are the key. This isn't the kind of news that if the Bank had iron clad indemnification that they would use such vague words. If FMAE/FMAC had a corroborating press release, it would warrant a great sigh of relief, but where's that pronouncement? The silence is deafening, the spin nauseating.
Furthermore, don't think a press release of this import went out casually, without a careful balancing act to promote the idea that BofA is in the safe zone, while avoiding allegations of false statements when (not if) the shareholder lawsuits commence. What do you think "Historical Experience" means? That they are familiar with paper work and protocol? No, don't think so, it's more along the lines of "we believe we can count on the good graces of the folks in Congress who's portfolios we've padded (apologies for the repeated alliterations) with VIP loans to bail us out or a corrupt administration that will use fiat to intervene with the GSEs". Or maybe it's the historical and broadly held misconception that the GSE mortgages were/are backed by the US Government.
But the dirty secret is that Countrywide wasn't selling off the loans to the GSEs during it's $1.4T origination spree because the GSEs were restricted during 2004-2005 from buying the sub prime loans (they needed a liberal congress to get them back to irresponsible loan purchasing after 2007 - thanks to Frank, Dodd, Waters, & Co.). Private mortgage investments represent an additional $300B liability to Countrywide/BofA. You cite MBIA, but there are others like Greenwich Financial that represents even more investor claims.
If you doubt the numbers, consider that BofA's market capitalization is 1/2 of it's Book Value. In otherwords, people with some skin in the game are worried, worried to the point that they don't even believe the books (scary for a bank that counts it's assets as liquid cash). So, Wikileaks or no Wikileaks, once the Courts start ruling to force buy back of toxic mortgages, BofA is a house of cards. Too bad they can't shed the Countrywide liability, but because they purchased it without any bankruptcy limiting the surviving liabilities, so they're stuck with it, and no one of sound mind would even consider buying up those entities from under BofA. You couldn't pay someone to take it now that the cat's out of the bag.
Now, all of this is assuming that we've seen the bottom of the foreclosure crisis. Considering over 100,000 homes are 90 days in arrears or worse, abandoned, but not undergoing foreclosure, basically inventory withheld, and the smart money is on the double dip. BofA already has almost 1.3M customers in foreclosure. When a bank is 10 to 1 leveraged on exactly this kind of collateral, you get something like, well, Lehman Brothers, and you can bet that the vultures at GS and JPMC are already in the air circling while Geitner, Bernanke, and Co. are signing the blank checks that will make it happen.
If I sound cynical, well, it's because I am.
BofA and Wikileaks
I will definitely be looking for this link. Thanks for the heads up.
B of A has been a disgrace since its founding, when it began gobbling up small banks everywhere on its rise to the top of the dog pile.
catsden.wordpress.com
Perfect Timing, WikiLeaks
The Fed has been looking for a way to implode the US economy once and for all and WikiLeaks is providing the means for them to do it. Once BofA is even more exposed for the criminal outfit it is than it already is, countries which collectively own trillions of US dollars will begin to dump the currency en masse. But for the creditors to receive their due, a final liquidation will occur. This will bring on massive unemployment, grinding poverty and indefinite zero growth. Martial law will be imposed. Get ready for your very own 1984, America. It's right around the corner.
You seem to have bought the
You seem to have bought the line that the plutocrats want you to believe: that the "casino" economy of wall street and the banking industry is synonymous with the US Economy. They want us to believe that our well-being depends on a system that funnels most wealth being produced in this country into the hands of a very small group of people who hide behind corporate veils. Ever wonder why the disparity of wealth in the US was so much lower in the 1950's than in the 1920's? That is because the capitalists crashed their own system, taking many of us working stiffs down with it for a while, but resulting in important restructuring that has taken them six decades to undo. And, undo they have, putting us right back into the "gilded age", with the important "improvement" being that they are much more sophisticated in fooling most of us into voting against our own best interests.
BofA does suck
Plain and simple they are crooks. My simple little charge card account has been their target for fraudulent interest charges. Been with them for 11 years but the time has come to say good-bye.
B of A loan-sampling info comes out in court case
If you're wondering what toxic crap B of A might be hiding, look at this article from ZeroHedge:
http://www.zerohedge.com/article/how-allstate-used-sampling-confirm-bofa...
There is a link to 150 pages of legal stuff at the end, and it names names! Here is a Bloomberg article if you'd like the background info regarding this lawsuit.
http://www.bloomberg.com/news/2010-12-28/allstate-sues-countrywide-finan...
I don't expect anything very interesting out of Wikiweaks. I haven't seen anything interesting released from them. Also, Mr. Assange sure likes to taunt Big Brother, which does NOT seem like a smart thing to do if he was a real whistleblower.
i hope BofA is also buying up
i hope BofA is also buying up obamablows.com, geithnersucks.com, bernankeisanevilimbecile.com, summersisacocksucker.com... wellyougetthepoint...
they all work for BofA (and the rest of the financial mafia) and they've all been working overtime, and continue to do so, to funnel every dollar of current and future american productivity out of the hands of those doing the productive work and into the hands of a tiny financial elite. once that elite has alchemized those dollars into hard assets (commodities, farmland, productive industrial operations around the world), the shell of an american economy they leave behind will quickly collapse under the mountain of debt they have created -- listing you as the "responsible party."