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This leaves the president with little hope for any positive economic news in time for the November 2012 election.
President Barack Obama
Nancy Bush, a financial analyst and contributing editor at SNL Financial, said that the FHFA's bombshell announcement heading into Labor Day weekend left her "aghast at the lack of coordination among the various housing regulators and other authorities."
Bank of America investors are sure to be confused. After all, the bank on Dec. 31 reached mortgage putback agreements with
Fannie Mae (FNMA) and
Freddie Mac (FMCC), agreeing to pay $2.8 billion to the government-sponsored enterprises.
Of course, Friday's FHFA lawsuits are different, as they involve private-label mortgage-backed securities that were sold to the GSEs. But such large lawsuits, with a total of over $57 billion in mortgage-backed securities putback demands against Bank of America -- including claims for securities sold by Countrywide and Merrill Lynch before those companies were acquired by BAC -- are bound to leave investors reeling on Tuesday. It will also stifle banks' risk-appetite.
Bank of America's previous $8.5 billion settlement of Countrywide mortgage putback claims from institutional investors is unsettled, with a flurry of lawsuits announced this week, including filings by the
Federal Deposit Insurance Corp.,
Goldman Sachs (GS - Get Report), and a subsidiary of
U.S. Bancorp (USB - Get Report).
Mortgage giants Fannie and Freddie were placed into government receivership nearly three years ago with the Federal Housing Finance Agency as their overseer. The FHFA is required by law to "recover taxpayers' money" from any party that may have ripped-off the GSEs. Then again, the banks being roasted were, for the most part, the same ones that were bailed out by the federal government through the Troubled Assets Relief Program, or TARP, which the president supported.