Tag Archives: Punishment
Posted on 06. Sep, 2011 by Maxwell Leary.
Sept. 6 (Bloomberg) — U.S. government-backed firms and agencies should “stop punishing banks” and suspend demands for mortgage repurchases because they are impeding an economic recovery, according to Paul Miller of FBR Capital Markets & Co.
Repurchase losses may total $121 billion, wrote Miller, a former federal bank examiner, in an analyst’s note to clients dated today. He previously said the tally might range from $54 billion to $106 billion. Losses for Bank of America Corp. could reach $66 billion in some scenarios, he wrote.
Fannie Mae, Freddie Mac, the Federal Housing Authority and the Federal Housing Finance Authority “are acting in their own self-interest as opposed to that of the broader U.S. economy,” Miller wrote. Their claims “drain capital from the banking system, and they cause banks to overly tighten credit standards, which pushes potential home buyers onto the sidelines.”
Bank of America, the biggest U.S. lender by assets, led decliners in New York trading last week after the Federal Housing Finance Agency sued 17 banks to recover losses on mortgage-backed securities sold to Fannie Mae and Freddie Mac. The FHFA is seeking to recoup $196 billion spent on the securities, plus other damages including civil penalties.
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