By Adam Alvarez:With each and every passing day it seems companies and our own government take measures that indescribably strive to merely elongate our own economic crisis. Whether turning a blind eye to rising gas prices to baiting us with electric cars to even taking steps to weaken our own currency while falsely denying the inevitable inflation, most in authority just don't seem to understand economics.
In February, five of the nation's largest banks agreed on a $25 billion settlement over widespread, systemic mortgage fraud and related issues.
The $25 Billion Deal, announced with huge fanfare, was supposed to help up to a million struggling homeowners, primarily via debt forgiveness.
Let's flash forward a few months to see how debt forgiveness is working out in practice.
Remember that massive $25 billion settlement between the nation’s largest mortgage servicers — Bank of America, Wells Fargo, Chase, Citi, Ally — and attorneys general from around the nation? Well, it comes with a lot of rules for these institutions to follow.
On the surface, the latest Q3 bank numbers to come out of Bank of America today, were not quite as bad as those previously reported by the other TBTFs, namely JPM, Wells and Citi. At a (massively adjuste4d) EPS of $0.20, this was just 1 cent below the expected $0.21, even as net revenue of $21.74 billion missed expectations of $21.95 billion. So far so good. At least so good until one realizes that of the $5.1 billion in pretax income, some 1.4 billion, or over a quarter, was from the usual accounting magic well of gimmicks: loan loss reserve releases!
Hedge fund manager and famed short seller David Einhorn is right: no matter how bad you think it is, it’s worse.
Consider this pious statement by David Holland of Rust Consulting, the firm responsible for sending out settlement checks, at the Senate Banking subcommittee hearings on the Independent Foreclosure Review earlier this week: