I see what your saying I guess I thought because BOA put Billions aside for put backs and they were allowed to screw the taxpayers through Fannie for a penny on the dollar on $117 Billion worth of toxic loans they were now sitting a little better.
“But how sharp is Freddie if all it can do is squeeze a $1.28 billion payment out of a giant customer in exchange for relinquishing fraud claims on $117 billion worth of outstanding loans? The very best its million-dollar executives can do is claw back a penny on each bubbly subprime dollar?”
http://finance.fortune.cnn.com/2011/01/03/is-fannie-bailing-out-the-banks/
Well, you have to realize the $1.28B is not a final settlement, it was to cover only the sour note defaults up to that date. Let’s presume 80% or $94B are sound. That leaves us with $23B - $1.3 to settle. With $22B outstanding, that leaves roughly another 80% to put back and it’ll take many a $2B quarterly write-downs to break even - roughly 2 1/2 years.
I envision lots more defaults up the tracks - strategics as well will be adding to the totals, further increasing BAC’s exposure.
It’s not good and won’t be “good” for some time to come...
But, I could be wrong. FedGov may yet bail out again.