This was emailed to me. The full story is here. http://www.zerohedge.com/article/bank-america-gaming-government-loan-guarantees
It appears Bank of America is intentionally failing to collect on the portion of its mortgage portfolio that is back by Uncle Sam. Screwed again, America!
I have long suspected that it was only a matter of time before banks began to adjust their Collection efforts to reflect Government Guarantees on their loan portfolios.
Simply put, imagine you are a bank with $100 billion in loans. Of this, $20 Billion is guaranteed by the government, $80 billion is your own money. If you managed the collection organization responsible for servicing this debt wouldn’t you be just a wee bit tempted to make sure that your $80 billion was getting the priority?
The table below details the past 12 quarters of Total Loans for Bank of America along with the portion that is Noncurrent:
The Noncurrent percentage has jumped from 5.30% in Q3 to 6.75% in Q4. Quarter on Quarter there is another $12.44 Billion in Noncurrent loans.
The next table details the same 12 quarters and reviews what portion of the Noncurrent loans are guaranteed by the Government (er, you and me the taxpayer):
Bank of America has had a massive jump in the Noncurrent loans that are Government Guaranteed. The Quarter on Quarter jump is… wait for it… $11.40 Billion.
So, magically, the incremental $12.44 Billion that has become Noncurrent Quarter on Quarter at Bank of America has a guarantee on $11.40 Billion. Nearly 92% of the jump in their Noncurrent loans are covered by us, the taxpayer.
This is no conspiracy theory discussion – these are cold hard facts supporting what any reasonable actor would do in the situation. If the government is going to cover my losses on a portion of my loan portfolio I can damn well guarantee you I’d be moving my best collectors to the portfolio I’m responsible for. The government can have my new hires, my undesirables, my slow workers, etc…
I highly doubt that we’ll ever hear about this, but this is yet another massive shift from the taxpayer to the bank!
Screwed Again!
Publius
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