Bankruptcy

Ironies of a Post Bailed Out World

By mcbride

The news today is that Bank of America and Ally Financial both settled claims with mortgage giants, Fannie Mae and Freddie Mac, for 2.8 billion, for BoA, and 500 million, for Ally.  Note first that Ally is the new name for the lender, GMAC.  Second, note that all four of these entites was saved from financial ruin by the federal bailout, using taxpayer dollars.  In fact, the US Tresury presently owns some 56% of Ally Financial.  Bottom line here is that the government in one form or another is on all sides of this transaction as every entity invloved is here today only as a result of decisions that they were “too big to fail” and had to be saved, again using taxpayer money…as opposed to all of the Mom and Pop businesses which have closed in the last few years. 

Here is more on the settlement: “For Bank of America, the settlements are the latest example of the high cost of the Countrywide acquisition. Buying the troubled lender for an initial price of $4 billion has led to quarterly losses, legal settlements and an ongoing investigation of foreclosure practices.”

Here is a link: http://www.star-telegram.com/2011/01/03/2741214/bank-of-america-freddie-mac-fannie.html

Michael

Full post as published by Texas Lawyer Blog on January 04, 2011 (boomark / email).