MYDemaray Posted June 11, 2014 Share Posted June 11, 2014 Anyone have any thoughts on what happens if BAC just says...ok Justice, let's settle this in court. I'm guessing the $$ amount Justice will ask for in that case will far exceed the $17bn or whatever they are willing to settle for out of court. Just curious if anyone has thought through how that would play out. Link to comment Share on other sites More sharing options...
rkbabang Posted June 11, 2014 Share Posted June 11, 2014 Anyone have any thoughts on what happens if BAC just says...ok Justice, let's settle this in court. I'm guessing the $$ amount Justice will ask for in that case will far exceed the $17bn or whatever they are willing to settle for out of court. Just curious if anyone has thought through how that would play out. Literally anything could happen. You'll have government lawyers and maybe judges trying to make names for themselves to further their political careers. It could take years and there could be appeals. The only good thing, is that I don't think either side wants this to drag on for years. So far we've heard that BAC wants to settle for $12B and the government wants $17. My prediction is that the settlement will be announced this month or next and it will be in the middle. $14-15B. Link to comment Share on other sites More sharing options...
tng Posted June 11, 2014 Share Posted June 11, 2014 Literally anything could happen. You'll have government lawyers and maybe judges trying to make names for themselves to further their political careers. It could take years and there could be appeals. The only good thing, is that I don't think either side wants this to drag on for years. So far we've heard that BAC wants to settle for $12B and the government wants $17. My prediction is that the settlement will be announced this month or next and it will be in the middle. $14-15B. There is also a pretty good chance that they are just fiddling with the semantics to get the headline number higher. Most of these settlements have not been cash settlements. It involves some complex stuff such as exchanging securities and doing other things. It is like the BAC/MBIA settlement where BAC buys MBIA bonds and various securities for pennies on the dollar and gives it to MBIA for 100 cents on the dollar, creating a big headline number. There is some type of legal arbitrage going on in there. Link to comment Share on other sites More sharing options...
blainehodder Posted June 11, 2014 Share Posted June 11, 2014 http://mobile.reuters.com/article/idUSKBN0EM2I820140611?irpc=932 Some good news. Might have an impact on negotiations. Link to comment Share on other sites More sharing options...
fareastwarriors Posted June 11, 2014 Share Posted June 11, 2014 BofA Mortgage Talks Said to Stall as U.S. Prepares Suit http://www.bloomberg.com/news/2014-06-11/bofa-mortgage-talks-said-to-stall-as-u-s-prepares-suit.html The Justice Department broke off negotiations earlier this week because it was dissatisfied with the bank’s offer to pay more than $12 billion, which included at least $5 billion in consumer relief, according to the person, who asked not to be identified because the discussions are private. The department’s latest settlement request was for about $17 billion, though negotiators were willing to consider less, the person said. The amount would come on top of the $9.5 billion the bank agreed to pay in March to resolve Federal Housing Finance Agency claims. Link to comment Share on other sites More sharing options...
Guest Dazel Posted June 12, 2014 Share Posted June 12, 2014 Bank of America should go to court....it would be the best publicity and marketing event of their existence. We are paying for Countywide's mistakes for America....when we could have bankrupted the company and we are going to show America in court that Bank of America had nothing to do with the lawsuits brought against it....we did not know the extent of Countrywide's problems it was "their" managements that underwrote the mortgages in question. At the request of the Federal reserve we did our duty in trying to save the financial system...we took on a sinking ship. The same government that asked our helped has returned our efforts with costing our shareholders many billions of dollars in fines and lawsuits which we will pay if the American people feel we are responsible for another companies mistakes. We recognize that tax payers role in helping us through these troubling times. However, we would like the people to know that we are paying for mistakes we did not make. Enough already...is it time to sue the federal reserve? Link to comment Share on other sites More sharing options...
Mephistopheles Posted June 12, 2014 Share Posted June 12, 2014 Bank of America should go to court....it would be the best publicity and marketing event of their existence. We are paying for Countywide's mistakes for America....when we could have bankrupted the company and we are going to show America in court that Bank of America had nothing to do with the lawsuits brought against it....we did not know the extent of Countrywide's problems it was "their" managements that underwrote the mortgages in question. At the request of the Federal reserve we did our duty in trying to save the financial system...we took on a sinking ship. The same government that asked our helped has returned our efforts with costing our shareholders many billions of dollars in fines and lawsuits which we will pay if the American people feel we are responsible for another companies mistakes. We recognize that tax payers role in helping us through these troubling times. However, we would like the people to know that we are paying for mistakes we did not make. Enough already...is it time to sue the federal reserve? Regarding the bankruptcy, I have always wondered why they didn't do that. Back then I heard that the reason to not put Countrywide into bankruptcy was because it would raise the cost of borrowing and lose credibility for the other subsidiaries. But after spending $50 billion+ on settlements, it seems like bankruptcy would have been a better option. Any lawyers here who can chime in? Link to comment Share on other sites More sharing options...
ECCO Posted June 12, 2014 Share Posted June 12, 2014 Bank of America should go to court....it would be the best publicity and marketing event of their existence. We are paying for Countywide's mistakes for America....when we could have bankrupted the company and we are going to show America in court that Bank of America had nothing to do with the lawsuits brought against it....we did not know the extent of Countrywide's problems it was "their" managements that underwrote the mortgages in question. At the request of the Federal reserve we did our duty in trying to save the financial system...we took on a sinking ship. The same government that asked our helped has returned our efforts with costing our shareholders many billions of dollars in fines and lawsuits which we will pay if the American people feel we are responsible for another companies mistakes. We recognize that tax payers role in helping us through these troubling times. However, we would like the people to know that we are paying for mistakes we did not make. Enough already...is it time to sue the federal reserve? I agree 100%. That is really a case of extortion from the us government. Link to comment Share on other sites More sharing options...
MYDemaray Posted June 12, 2014 Share Posted June 12, 2014 From the sound of it, a lot of the suit being prepared involves Merrill. I'm kind of with you guys. Another strategy would be to litigate and try and stall things to post 2016 when we see an administration change and Holder & Co are out at Justice. Link to comment Share on other sites More sharing options...
sswan11 Posted June 12, 2014 Share Posted June 12, 2014 http://online.wsj.com/articles/bank-of-america-justice-department-tangle-in-court-1402527723 Bank of America, Justice Department Tangle in Court Outcome of Mortgage Case Could Affect Talks Over Potential Multibillion Pact Link to comment Share on other sites More sharing options...
xazp Posted June 13, 2014 Share Posted June 13, 2014 C is currently falling because they also will not agree to the DOJ's terms, which is also pulling BAC down. C offered around $4Bn, DOJ wants $10Bn. C is less involved in U.S. mortgages than either JPM or BAC so DOJ numbers sounds very high relative to JPM's settlement. It's sort of interesting because simultaneously the courts seem to be ruling against the DOJ. The FIRREA cases are pretty weird. Fraud is hard to prove. http://www.housingwire.com/articles/30295-bofa-close-to-beating-doj-850m-rmbs-fraud-suit My opinion is that both C and BAC want to settle - they've settled probably $70Bn in suits against them, and if they are balking at this settlement I would not assume the DOJ is correct. http://online.wsj.com/articles/bank-of-america-justice-department-tangle-in-court-1402527723 Bank of America, Justice Department Tangle in Court Outcome of Mortgage Case Could Affect Talks Over Potential Multibillion Pact Link to comment Share on other sites More sharing options...
alertmeipp Posted June 13, 2014 Share Posted June 13, 2014 DOJ is punishing us, the shareholders now. i dont remember that i ever issue a mortgage in my life. :'( just take the previous team to jail. gee Link to comment Share on other sites More sharing options...
Mephistopheles Posted June 13, 2014 Share Posted June 13, 2014 If the DOJ is truly asking for excess amounts, which seems like they are, it would be better not to settle and take this to court. It would be bad for the stock in the short run but better in the long run. IMO, management has an incentive to pop up the stock in the short run to increase the value of their options, so they'd rather settle. Link to comment Share on other sites More sharing options...
xazp Posted June 13, 2014 Share Posted June 13, 2014 Here's the reason I think the DOJ is over-reaching. Recall that Countrywide settled for $8.5Bn with the actual people who were hurt, approved by plaintiffs, defendants, trustee and judge. The plaintiffs are no dummies (PIMCO, blackrock, etc) and so I think the $8.5Bn represents a good approximation of how much the buyers of the MBS were "damaged." The DOJ is asking for substantially more than that amount from both BAC and C. So far BAC and C are basically replying, OK then you're going to have to prove it, because we think you're asking for more than anyone actually suffered. C in particular does not have large mortgage operations in the U.S., so for them to get hit with an offer that's bigger than Gibbs/Brun asked from Countrywide seems a little off-kilter. Most of the incentives for management are towards settlement, so if they think DOJ has over-reached, I think odds are likely they did. The fact that both are balking at the same time tells me, DOJ is the one that's out of line. If the DOJ is truly asking for excess amounts, which seems like they are, it would be better not to settle and take this to court. It would be bad for the stock in the short run but better in the long run. IMO, management has an incentive to pop up the stock in the short run to increase the value of their options, so they'd rather settle. Link to comment Share on other sites More sharing options...
rkbabang Posted June 13, 2014 Share Posted June 13, 2014 DOJ is punishing us, the shareholders now. i dont remember that i ever issue a mortgage in my life. :'( just take the previous team to jail. gee Exactly. Companies do not commit crimes individual human beings do. Unfortunately the shareholders pay the price while the criminals get a tiny slap on the wrist and retire to enjoy their millions. "Mozilo agreed to repay $45 million in ill-gotten profits and $22.5 million in civil penalties. Former Countrywide President David Sambol will repay $5 million in ill-gotten profits and $520,000 in civil penalties, and former Chief Financial Officer Eric P. Sieracki will pay $130,000 in civil penalties. Under the agreement, as is usual in these sorts of cases, no one is admitting to any wrongdoing - and forget about getting an apology. While a settlement of nearly $70 million sounds great, Mozilo walked away with nearly $140 million on shares he sold in 2006 and 2007, based (he is accused) on insider knowledge that the pay-option ARM profit bubble had burst and these loans were failing in droves." http://www.cbsnews.com/news/angelo-mozilo-former-ceo-of-countrywide-financial-corp-settles-with-the-sec/ Link to comment Share on other sites More sharing options...
tng Posted June 13, 2014 Share Posted June 13, 2014 DOJ is punishing us, the shareholders now. i dont remember that i ever issue a mortgage in my life. :'( just take the previous team to jail. gee Worse yet, the government had stakes in BAC and especially C where they owned about 1/3, and sold those shares off before they decided to sue the new shareholders that brought it from the government! Link to comment Share on other sites More sharing options...
tng Posted June 13, 2014 Share Posted June 13, 2014 Bank of America should go to court....it would be the best publicity and marketing event of their existence. We are paying for Countywide's mistakes for America....when we could have bankrupted the company and we are going to show America in court that Bank of America had nothing to do with the lawsuits brought against it....we did not know the extent of Countrywide's problems it was "their" managements that underwrote the mortgages in question. At the request of the Federal reserve we did our duty in trying to save the financial system...we took on a sinking ship. The same government that asked our helped has returned our efforts with costing our shareholders many billions of dollars in fines and lawsuits which we will pay if the American people feel we are responsible for another companies mistakes. We recognize that tax payers role in helping us through these troubling times. However, we would like the people to know that we are paying for mistakes we did not make. Enough already...is it time to sue the federal reserve? Regarding the bankruptcy, I have always wondered why they didn't do that. Back then I heard that the reason to not put Countrywide into bankruptcy was because it would raise the cost of borrowing and lose credibility for the other subsidiaries. But after spending $50 billion+ on settlements, it seems like bankruptcy would have been a better option. Any lawyers here who can chime in? It might be related to why Bank of America brought Merrill Lynch and why they didn't try to exercise the material adverse change clause when losses at Merrill started piling up the very next quarter. Ken Lewis said that the government made it clear that he didn't have a choice. Link to comment Share on other sites More sharing options...
Kraven Posted June 13, 2014 Share Posted June 13, 2014 DOJ is punishing us, the shareholders now. i dont remember that i ever issue a mortgage in my life. :'( just take the previous team to jail. gee Worse yet, the government had stakes in BAC and especially C where they owned about 1/3, and sold those shares off before they decided to sue the new shareholders that brought it from the government! As the Scorpion said to the frog after stinging it so that they'll both drown, "I could not help myself. It is my nature." Link to comment Share on other sites More sharing options...
Liberty Posted June 15, 2014 Share Posted June 15, 2014 http://www.bloomberg.com/news/2014-06-14/citigroup-bofa-said-to-face-u-s-lawsuits-as-talks-stall.html Link to comment Share on other sites More sharing options...
meiroy Posted June 15, 2014 Share Posted June 15, 2014 The DOJ is doing it right. You always start with a high number to get as much as you can, they are also asking 10B from Paribas, surely they should present far higher numbers for local banks to justify that. That's the game. If BAC has a problem with that they can go to court (I for one think that would be great, so we can finally have a clear judgement on what and how it happened and if the gov pushed them to buy whatever). As for "it's the current shareholders who are paying" well, the current shareholders are also benefiting and will benefit from assets that were invested by previous shareholders at a current price which is lower than value so really there's no justification to whine. We benefit from that and we pay for that as well. Link to comment Share on other sites More sharing options...
Uccmal Posted June 17, 2014 Share Posted June 17, 2014 The DOJ is doing it right. You always start with a high number to get as much as you can, they are also asking 10B from Paribas, surely they should present far higher numbers for local banks to justify that. That's the game. If BAC has a problem with that they can go to court (I for one think that would be great, so we can finally have a clear judgement on what and how it happened and if the gov pushed them to buy whatever). As for "it's the current shareholders who are paying" well, the current shareholders are also benefiting and will benefit from assets that were invested by previous shareholders at a current price which is lower than value so really there's no justification to whine. We benefit from that and we pay for that as well. You are spot on meiroy. We would never have got BAC stock this cheap or cheaper had BAC not been under threat of all this litigation. Its called value investing. All the whining about current shareholders paying the bill is BS. I bought this stock fully knowing. As to the DOJ thing. I suspect it is mostly posturing by both sides. BAC can take it to court and bottle it up past the elections, possibly for years with appeals upon appeals. I think the DOJ has the weaker hand at the moment. BACs leader is a lawyer, and he knows the law, and I suspect he has a good handle on how to play this out. My bet is it will not eat up earnings in any significant way, and it will be a mix of soft costs, already paids (items BAC has paid out that will fit neatly into the DOJs narrative), and some fine along the lines of 2 B. Its all just politicking BS. If BAC gets badly nicked then they get DTAs to use in the future. In general, my observation of Americans is that they will only tolerate government interference so far, and we are getting to that point. The politicians have used up their mileage on this one. Link to comment Share on other sites More sharing options...
alertmeipp Posted June 17, 2014 Share Posted June 17, 2014 how would punishing current shareholders help stop this from happening again? nonsense. Link to comment Share on other sites More sharing options...
rkbabang Posted June 17, 2014 Share Posted June 17, 2014 how would punishing current shareholders help stop this from happening again? nonsense. Exactly. Just because it helps push the stock price lower creating a buying opportunity for value investors doesn't mean it is right and moral. If the government assassinated Warren Buffet it might push BRK-A/B stock price lower and create an investment opportunity, would that be OK? Link to comment Share on other sites More sharing options...
morningstar Posted June 17, 2014 Share Posted June 17, 2014 how would punishing current shareholders help stop this from happening again? nonsense. Perhaps it would create an object lesson that investors should not put capital into enterprises whose activities will generate tens of billions in litigation losses, and should appoint boards that will better govern the conduct of the companies they own. But more to the point, the company is the target of litigation, not shareholders. The law luckily protects us from liability for the past and current misdeeds of the companies we own. Link to comment Share on other sites More sharing options...
CorpRaider Posted June 17, 2014 Share Posted June 17, 2014 Maybe teach to entire business community to never buy a company from an orange gentleman after an epic bull market in his business? Link to comment Share on other sites More sharing options...
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