Translation: They've settled with the people they fleeced, the rich people that is.
On Tuesday Reuters reported that Bank of America was close to a settlement agreement with a group of powerful group[sic] of investors that lost money on mortgage-backed securities.
This may seem like a tidy sum but not when compared to how much they made for their part in the bailout scam. They have received in excess of $45bn in TARP money, and, of greater relevance here, they got a $118bn in guarantees from the US government against "bad assets."[2] Yes, the same junk mortgage bonds for which the BofA is shelling out the $8bn. So if they haven't used up the $118bn of extorted funds from the government, then it is not they but the US taxpayers who will be forking over their hard earned dough to the unidentified "group of powerful investors."
The bailout money is not the only benefit BofA has derived from the calamity of '08. In that year I wrote an article on the topic and, if you will permit me, I'll quote myself (If you follow the link please remember that not all the bail had by then been doled out, hence the difference in the total aid quoted there):
At number five is Bank of America. They are in such distress that they have only been able to buy Countrywide Mortgage, MBNA (Maryland Bank, National Association), and investment banking giant Merrill Lynch since midyear. Countrywide, as you may recall, was called ground zero for predatory lending by angry Congressional regulators. So laden, we were told time and again, was Countrywide with bad paper that nothing could save it. Was it corporate altruism that led BoA to purchase the depressed company? Not according to their CEO who told CNBC that he thought the company could be turned around in a year or two. He added that he thought this bad paper was not as worthless as the public had been led to believe.[3]
Another point of interest is that this group of investors is getting special treatment. Time and time again bondholders have suffered loses from these bonds and have been told that "everyone has to take a hair cut." While we don't know the par value of the underlying bonds being settled, the price tag is pretty steep suggesting that not too much hair hit the floor, if any. The absence of this critical bit of information in Reuters account leaves much open to inference. We don't know who these "powerful" people are, and how much there bonds are nominally worth, just how much they got for them. In this case, what is omitted is more instructive than the information provided.
So who benefited from the collapse? Certainly not the homeowners who are having their homes foreclosed, in many cases illegally; nor average bondholders, be they private or institutional like mutual funds or pension funds. They have been thrown under the big red, white, and blue bus every time. Only the biggest banks, and now the biggest bondholders have been handsomely provided for with the backing of the US and other governments.
This is plutocracy.
Reuters described these bondholders as "powerful," indeed they are.
Once again, I yield the floor to George Carlin:
They own you!
http://www.youtube.com/watch?v=4jQT7_rVxAE
[1] http://www.reuters.com/article/2011/06/29/us-bankofamerica-mortgages-idUSTRE75R7I420110629?feedType=nl&feedName=usmorningdigest
[2] http://news.bbc.co.uk/2/hi/business/7832484.stm
[3]http://www.countercurrents.org/fryett191108.htm
