Rep. Maxine Waters, a senior Democrat on the House Financial Services Committee, has issued the following statement after Bank of America settled with Fannie Mae and Freddie Mac (the government-sponsored enterprises) for approximately $3 billion over the misrepresentation of loans that the bank originally sold to the GSEs:
“I’m concerned that the settlement between Fannie Mae, Freddie Mac and Bank of America over misrepresentations in the mortgages Bank of America originated may amount to a backdoor bailout that props up the bank at the expense of taxpayers. Given the strong repurchase rights built into Fannie Mae and Freddie Mac’s contracts with banks, and the recent court setback for Bank of America in similar litigation with a private insurer, I’m fearful that this settlement may have been both premature and a giveaway. The fact that Bank of America’s stock surged after this deal was announced only serves to fuel my suspicion that this settlement was merely a slap on the wrist that sets a bad example for other negotiations in the future.
"I understand that the questions raised by fraudulent servicing practices were not addressed in these settlements, and I hope that Fannie Mae and Freddie Mac, along with their conservator, are more aggressive in pursuing banks for the fraud I documented in my Subcommittee during the last Congress.”
For more information, visit http://waters.house.gov.