FIRST SHOE -- Bank of America and Wells Fargo announced that they may face fines and other penalties from federal and state investigations into their mortgage foreclosure practices. Bank of America also warned of as much as $230 million in increased legal costs related to the slowed down rate of foreclosures, and Wells Fargo said penalties are likely.
SECOND SHOE -- Anonymous sources say federal regulators may seek as much as $20 billion in penalties from banks that serviced flawed loans. The proposal hasn't been presented to banks yet.
THE REST OF THE DRESS???: Bank of America announced that a group of investors pressuring the bank to repurchase bad mortgages has doubled the number of mortgages in their claim. The investors include Pacific Investment Management Co, Inc.(also known as PIMCO), the Federal Reserve Bank of New York, and BlackRock, Inc.
Interesting notes about the litigation. BlackRock manages the New York Fed's portfolio of bad mortgage loans. And Merrill Lynch Investment Managers, which is owned by Merrill Lynch, Inc., a wholly owned subsidiary of Bank of America, owns nearly half the stock of BlackRock. So BlackRock appears to be suing a major shareholder of BlackRock on behalf of itself and a major regulator of both companies.
Gonna be interesting to see how THIS plays out!