If you read my last post, you may recall my emphasis on the word, putback. Strangely enough, it took about five minutes after I put that post up that the phrase once again became important.

Read this (from a CBS Moneywatch posting called, “The Foreclosure Mess: The Start of Another Bank Bailout?” –

The foreclosure mess suddenly turned messier yesterday when a group of heavyweight investors, including the Federal Reserve Bank of New York, demanded that Bank of America buy back toxic mortgages that a subsidiary had sold them during the housing bubble. BlackRock, the world’s largest investment company, and Pimco, the world’s largest bond manager, joined the New York Fed in arguing that shoddy record keeping and other missteps by Bank of America subsidiary Countrywide Financial amount to a breach of their contract. Such a breach would allow the investors to sell the mortgages back to the bank at full price. The investors’ claims, which became public yesterday, probably marks the opening shot in a long legal battle that could cost B of A billions and possibly push it into insolvency.

Wow, the unfortunate entities (like pension funds) who bought these toxic assets have come back for a fight. They are saying that the numerous, continuous and often illegal acts (false affidavits presented to the court system – not a matter of opinion or just sloppy paperwork – crimes), have breached their contract. So, in the vernacular, the want their money back and they want it now! (That’s a putback by the way.)

Okay, let’s read a little more from the article –

That adds a new dimension to the foreclosure mess, which the banks had been hoping to put behind them. Banks and others had argued that maybe some i’s weren’t dotted and a few T’s might have misplaced crosses on mortgage documents, but those were just technicalities. The bottom line is that people didn’t pay their mortgages and foreclosures should be allowed to proceed. The Wall Street Journal editorial page recently declared: “We’re not aware of a single case so far of a substantive error.” But now some of the world’s savviest investors are joining defaulting homeowners in claiming that too many T’s are missing crosses. Unlike defaulting homeowners, most of whom will eventually lose their homes to foreclosure, the investors may succeed in winning concessions from the banks. And if the courts agree that Bank of America must make the investors whole, it could be more than the bank’s fragile finances could bear.

So, if the banks through their very own wretched incompetence lose ten of billions of dollars, they may turn to the taxpayers for a little more money!

Have you noticed a common thread that runs through every single story about these banking adventures? No one ever seems to go to jail. No one every seems to really get in any trouble at all, except of one group, a little bitty one.

The taxpayers always seem to be riding to the rescue of their fellow citizens, whoops, I mean the banks, whether they want to or not.

Tell me, does that get old after a while?

James Pilant