N.Y. Fed joins investors demanding Bank of America buy back mortgages

"The Federal Reserve Bank of New York has joined a group of investors demanding that Bank of America buy back billions of dollars worth of mortgage securities that are plagued with shoddy documentation and lending standards, according to people familiar with the matter."

Surely this is just the beginning of the matter.

The demand from the New York Fed and other investors sets up an unusual and high-stakes confrontation, pitting an arm of the federal government against the country's biggest bank. It also illustrates conflicting policy priorities, because it could put the Fed at odds with a bank the Treasury Department has been helping through the financial crisis over the past two years.

With this new confrontation, the government finds itself in the awkward position of being an unhappy private investor pressing for its rights to be enforced. The New York Fed holds roughly $16 billion of mortgage securities that it acquired after it bailed out American International Group.

N.Y. Fed joins investors demanding Bank of America buy back mortgages

With trillions at stake, that is, hundreds of trillions at stake, we are reminded of the thousands of lawsuits during the comparatively puny savings and loan debacle in the 1980s. Supposedly there is none of that going on given that 2 years after TARP, the bankers seem to be doing better than they ever have:)

Other links:

Foreclosure debacle

Foreclosure mess and the fraud of it all