Bank of America is practically bankrupt. Back in 2008, during the subprime crisis, Bank of America was strong-armed in to buying the mortgage behemoth, Countrywide. Now with foreclosures picking up at a rapid pace, Bank of America was getting killed in their mortgage losses. To the point they are almost bankrupt.
Rumors were floating this week that JP Morgan would be buying Bank of America. I couldn’t see it though. Who would want to buy any bank that has the number of foreclosures awaiting them that Bank of America has? Well it turns out I was right.
In a very under-reported news item, it was announced that Bank of America, in addition to receiving $5 billion from Warren Buffet, had sold their “real estate division” to Fannie Mae. Now all of these foreclosures are going to be transferred to Fannie Mae.
Of course, Fannie Mae is the quasi-government entity that was used to finance so many of the mortgages in America. As a result, the federal government has been having to provide Fannie Mae with 100’s of billions of dollars every month in order to keep them out of bankruptcy themselves. This is, of course, paid for with taxpayers’ dollars.
So in effect, the taxpayer has again bailed out a bank that is considered “too big to fail.” We are on the hook again for all of the foreclosures that Bank of America, through Countrywide, have. They made the bad loans, but it’s the taxpayer, not the bank, that is going to pay for them.
And they did this so sneakily that few people are apparently aware of it, thus avoiding the outrage that is associated with bailing out the big banks.
Welcome to America!
