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THE INVISIBLE HAND at work

September 2, 2011

Word of the lawsuits by the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, came as a surprise to the market and weighed on bank shares. The lawsuits could add billions of dollars to the banks’ potential legal costs at perhaps the worst possible time for the industry.
The FHFA plans to accuse major banks, including Bank of America Corp and JPMorgan Chase & Co, of selling bonds backed by mortgages that should have never been packaged into securities, said the sources, who are familiar with the matter. Neither source was authorized to speak on the record. A spokeswoman for the FHFA declined to comment.

FHFA and various investors have alleged that banks, while packaging residential home loans into securities sold to investors, failed to conduct adequate due diligence, and hid or misstated the quality of the underlying loans and underwriting as well as borrowers’ ability to make payments.
As more borrowers fell behind or went into foreclosure, the value of securities backed by their loans fell, causing losses for investors.
Losses stemming from the precipitous deterioration in subprime and other mortgages pushed the government to take over Fannie Mae and Freddie Mac on September 7, 2008. Since then, taxpayers have spent more than $140 billion to keep the firms afloat.
CAPITAL WEAKNESS
Major banks already face potential payouts of tens of billions of dollars to settle regulatory charges of abusive mortgage lending and foreclosure practices, and other investor lawsuits over mortgage debt losses.

THE “INVISIBLE HAND” can work a deal:All banks are to sell their mortgage assets to Bank of America so they can be “rescued as too big to fail” and Bank of America would be thrown into receivership by the FDIC.FDIC will sell all assets ( minus loans) and pay $7.00
per share for all BAC shares thereby OWNING THE BANK and all its branches.The renamed bank will be called “THE FEDERAL BANK OF THE UNITED STATES OF AMERICA”. It will be funded by the US TREASURY with $51 Trillion dollars as allowed already by law.
Instructing the US Mint to deposit 51 newly minted Platinum $1 trillion coins which by law they would have to turn over the profits to the US TREASURY.And just like the State Bank of North Dakota,we the people may just have solved “the housing crises.long term lower cost mortgages made by our own bank ,(36 yr @ 4%).Create 2 million jobs with commercial loans to business at terms of first year payments interest only then at 6% for 36 years.Create another million jobs with new home loans.Terms 5% down,then 4% for 36 years. TAXPAYERS paying interest for TAXPAYERS.The $51 trillion will not be spent!! It will be on the balance sheet as $51 trillion mortgage assets.This asset will double every 18 years….1 X 18 = 102 trillion,2 X 18 =204 trillion..good-bye taxes.
And as for Freddie and Fannie as a reward for finally stepping up and doing the right thing,their shares will be sold as a new issue for $15 a share.They will become THE SERVICER FOR THE LOANS and being paid 1% that comes to $510 billion over 18 years.
May God continue to bless America
justaluckyfool.blogspot.com

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