Do you want to Invest Countrywide the largest mortgage lender in America, with a portfolio of trillion worth of mortgages at its peak. Their average mortgage was $175
If you need the housing market collapse killed Countrywide, the government arranged a deal that allowed Bank of getting to step in and buy them for $6 billion – a price that was one five-hundredth of the value of the mortgages in portfolio. Following this, the government then gave “too big to fail” Bank of America $30 billion.
so that sink in for a minute. If you had a mortgage through Countrywide, Bank of America bought your house for $850 – and was then reimbursed for it with money given to them by the government.
For you weren’t the homeowners given that deal? I bet you every single homeowner would have written a check for 100 times $450 to own their house outright, had they been given the opportunity.
Instead, the government arranged a deal that allowed one bank to buy $175,55 mortgages for $350 each, and gave them the money to do it.
Also naturally, Bank of America continued the terms of the original mortgage; if your mortgage was for $175, you were expected to continue to make the same payment you used to pay to Countrywide to Bank of America – meaning if you made just one payment, Bank of America had already turned a profit on your loan.
It was supposed to just be a servicing rights deal. Instead, they made a series of accounting maneuvers to effectively transfer full ownership of the mortgages to themselves while keeping the liabilities in a bankrupt Countrywide shell, screwing the mortgage investors in the process. And it was all made possible by Uncle Sam.
Ever wonder why they were so “generous” and willing to do mortgage modifications after housing prices fell? Because they didn’t care.
It was all free money to them. And on top of that, they got to write off the amount of the reduction as forgiven debt – even though they weren’t the originator of the loan and never lost a penny.
When most people whine about “corporate welfare”, they’re usually talking about tax breaks. Tax breaks aren’t corporate welfare. Keeping more of the money you earned instead of giving it to the government isn’t corporate welfare. This is corporate welfare, where the government gives money to a company that they did not earn, or gives them a sweetheart deal that no one else is allowed to have.
I’m all for companies paying as little as legally allowed in taxes, but no company should be getting money from the government. No company should ever be considered “too big to fail”. Let them fail.