By: David Dayen
I could barely suppress a laugh when reading about Bank of America CEO Brian Moynihan begging Tim Geithner to settle the foreclosure fraud issue so they can get out from under their liability. As Yves Smith points out, if Tim Geithner had the power to get Bank of America out of their mess, he surely would have done it by now, before their stock dipped 36% in the last three weeks. Geithner simply doesn’t have jurisdiction over state courts, where many judges are simply not going to allow foreclosures when standing to foreclose cannot be proven (Moynihan apparently distinguished on a conference call between “states where foreclosure can take place” and “states where foreclosure is going through very slowly,” and he might as well have been distinguishing between states that respect the rule of law and states that don’t). Geithner may try, but he cannot compel Attorneys General in both parties to settle for pennies on the dollar and relinquish all of their liability for consumer protection violations and fraud upon state courts. He cannot influence investors who see a giant meal ticket in the form of forcing big banks to repurchase faulty mortgage backed securities. If there was a magic bullet in this debacle, it would already have been fired.