Bank of America has come under fire, and there is now a class-action lawsuit by borrowers who feel as though they are being cheated by the banking giant, and perhaps on behalf of a political agenda. As has now become plain, Bank of America is using its internal bureaucracy to slow down the wheels long enough for Barack Obama to be re-elected, before the full scope of tax-payer liability is revealed in the whole bank bail-out scheme and mortgage modification scam put forward by the Obama administration. Borrowers are complaining that they have brought their accounts current under the new modifications to their mortgages, but that the banking giant is keeping them in limbo in order to hide the truly damaging scope of the bail-outs.
You see, the deal isn’t done until each mortgage modification has made its way through the paper-shuffle at the Bank of America, but this is causing trouble for borrowers who have long since gotten their financial house in order and need to secure loans on such things as new cars. They’re finding out that their credit reports still show the mortgages as overdue, despite the fact that they’ve complied with their agreements on the modifications to their mortgages, some of them longer than two years ago. Why is it taking Bank of America so long to square things away? The answer is simple, and political, and it comes down to more subterfuge on behalf of their favorite politicians. You see, when these deals are finalized, they’ll show a loss, and it will be huge, and they want to be sure to minimize damage until after the November elections.
In the mean time, their now-current mortgage-holders are simply in limbo, and while we can argue that they might deserve a hit on their credit, they would get one anyway, but the truth is that these mortgage holders may have been only a month or two behind, and made the agreement as a stop-gap since so many were recently unemployed at the time. They didn’t think this would drag on, or that two years later, their credit reports would show them as non-payers on their mortgages for more than two years. Worse, Bank of America is in receipt of funds for this purpose under the Home Affordable Modification Program(HAMP)
In one case, the complaint against Bank Of America alleges:
“[Bank of America] has serially strung out, delayed, and otherwise hindered the modification processes,” leaving thousands of borrowers “often worse off than they were before they sought a modification.”
This is quite the enterprise. Bank of America took $25 Billion from the US government in order to facilitate these modifications, and to date, they’ve actually sat on most of that money while tying up the loan modifications in red tape. Worse, the longer this goes on, the worse the position of those now in limbo. You might ask why they’d be interested in doing all of this, since they could simply modify the mortgages and move on, but that might be a sticky matter. Bank of America would have to report large losses that would demonstrate the failure of TARP. As long as all of these modifications are in limbo, they are neither losses nor does BofA need to disburse any of the $25 billion. that makes a whale of a difference on balance sheets as reported to investors.
Another reason Bank of America may be keeping this “in process” is that the elections of 2012 are just around the corner, and BofA has made significant investments in the political arena. A trip to OpenSecrets.org reveals that in 2008 alone, Barack Obama cashed in to the tune of nearly $400,000 from BofA contributors. In 2012, Mitt Romney has received a fair amount of cash, as has Obama, from Bank of America-related sources. Coincidence? Possibly, but Bank of America has so many ties to so many high-ranking politicians, including our previous President that it’s hard to pin this down on a partisan basis. It looks more like a ruling-class benefit, looking at the objects of political giving associated with Bank of America.
On Tuesday, a tweet came in from none other than Ann Barnhardt with a link to another story about Bank of America, and what the author over at market-ticker thinks of the institution, along with a track-back to what Matt Taibbi, an Occupy Wall Street member has to say about all of this. At least in this context, Mr. Taibbi is correct: Bank of America should be allowed to fail. It’s been propped up and supported and kept afloat with your future tax dollars. Worse, with politicians of both parties in its hip pocket, there seems to be no end in sight. It makes it easier to understand how characters like Barack Obama, an anti-capitalist, and Mitt Romney, a self-described “capitalist” both supported TARP, an astonishingly anti-capitalist idea. It also explains why we, the tax-payers, keep getting placed on the hook for the failures of these firms.
Unless and until we start paying closer attention to whom it is that funds our politicians, we are likely to see this same trend continue unabated. What does it say about what we’ve let become of capitalism that these large institutions are able to purchase so much influence in our political system? I don’t have a problem with donations, and I think they should be unlimited, but we voters are going to need to pay attention to the flip-side of that: We will need to pay attention to the disclosures, and vote accordingly. As I’ve reported previously, Bank of America along with Chase have moved some risky Euro-based derivatives into coverage by the FDIC.
This needs to cease, and I’m concerned that if we elect Mitt Romney, this will continue like a hand-off from George W. Bush to Barack Obama to Mitt Romney, and that it will continue unabated. The large banks that are failing need to fail, and the American taxpayer has every reason to expect its government to be good stewards of their money, instead of putting good money after bad. Here we have a company that has abused its customers in order to take money from the Federal government in order to assist them. Whatever you may think of the HAMP program philosophically, it was implemented in law, and to see this sort of abuse continue is ridiculous, but to see it continued even longer to allow some politicians cover is a scandal about which we should all be concerned.