Too Big to Fail (TBTF)

I'm generally skeptical about corporate charitable donations.  My sense is that they are primarily a transfer of value from shareholders to managers, rather than a value-enhancing investment in goodwill.  So on the DC Metro, what did I see today, but a poster advertising the 2012 DC Servathon that featured the logos of a variety of corporate sponsors, including Fannie Mae and Freddie Mac.

Lost in the attention to the state-federal mortgage servicing settlement is the other major servicing fraud settlement:  the $8.5B deal between BONY as trustee for various MBS trusts and Countrywide (Bank of America) over putback claims for securitization of mortgages that didn't comply with the requirements of the securitization documents.  

Here's a bombshell: the San Francisco City Assessor commissioned a serious audit of foreclosure documentation filed in the past few years. The audit examined 400 foreclosures.  It found problems with 85% of them, often multiple problems.

Adam Davidson wrote up an interesting apologia for Wall Street in the NY Times last week, which I think is ultimately a call for better regulation, rather than bank-hating.

There's been a lot of media coverage of the recent ruling of the NY Supreme Court (that's the trial court, not the final Court of Appeals) in MBIA v. Countrywide, a suit by the monoline bond insurer against Countrywide for fraud, negligent misrepresentation, etc. that induced it to insure Countrywide's mortgage-backed securities. This and Syncora's similar suit are being carefully watched because they are the MBS litigation that is the farthest along and thus seen as a belleweather for other rep and warranty suits.