Once again: United Nations' dishonesty to generate media attention and financial support?
Citibank to turn its back on the U.S. Consumer – then why support them with taxpayer money?

OBAMA: HIGH-LEVEL MALFEASANCE AND MISMANAGEMENT?

The Administration promised an unprecedented openness and transparency in the financial bailout scheme which is costing the taxpayers billions, if not trillions, of dollars.

So why do we now find that the Bank of America is now claiming that they are not liable for up to $4 billion in fees for a government guarantee and declaring that there was no signed agreement between the parties and that the funds were never used?

According to Reuters …

“BofA balking at paying fees for guarantees: report”

“Bank of America Corp is trying to avoid paying billions of dollars in fees to U.S. taxpayers for guarantees against losses at Merrill Lynch, saying the rescue agreement was never signed and the funding never used, Bloomberg reported citing people familiar with the matter.”

Guarantees?

What exactly was the purpose of a guarantee if not to serve as an insurance policy against future losses? And like an insurance policy, one is expected to pay the premiums regardless of whether or not the policy was actually used or not.

Regulators contend Bank of America owes at least part of a $4 billion fee it agreed to pay in January -- even without a completed legal document -- because the company benefited from implied U.S. backing on about $118 billion of Merrill Lynch assets, such as mortgage-backed bonds, the news agency said.”

A negotiating ploy?

“However, Bank of America says it owes the Treasury nothing, according to people familiar with the matter, but who declined to be identified because the negotiations are confidential, Bloomberg said.”

“Bank of America initially received $25 billion from the Treasury and later was forced to seek $20 billion more, plus $188 billion in asset guarantees, so that it could cover Merrill's losses.”

Did the government “pay” the Bank of America to take over failing Merrill Lynch? And is this nothing more than a “bad faith” negotiating ploy to lower the guarantee costs to the Bank of America?

“The sum demanded from Bank of America is likely to be smaller than the $4 billion described in terms of the agreement, the news agency said, adding that an update on the program's status may come July 17, when Bank of America reports second-quarter results.”

Government malfeasance and mismanagement?

How is it that the government apparently issued a $188 BILLION guarantee without a signed agreement? Or was this simply governmental smoke and mirrors; extracting billions from the Bank of America’s shareholders for nothing more than a press release designed to shore up the Bank of America’s routine transactions in the capital markets?

Both sides agree the accord was never signed and the funding went untapped, Bloomberg said.”

“Bank of America and the Treasury did not immediately respond to a Reuters email seeking comment that was sent outside of normal business hours.”

Is the government doing an AIG?

Is it possible that the government is selling nothing more than paper – all backed by a promise to tap additional taxpayer funds if needed? And what was to be the disposition of any money collected by the government? General fund reimbursement? Additional TARP usage? Political black ops? And, is it possible that the Bank of America will be forced to fund additional “affordable housing loans” in lieu of a full payback of any disputed fees?

The questions and lack of answers point to a significant failure of the Obama Administration to handle large funding amounts – and could presage the loss of billions of dollars in taxpayer funds due to transactional deficiencies such as failing to get a signed agreement before proceeding with the transaction.

Accountability for this program failure needs to be explored before the government commits to an even bigger boondoggle in the healthcare and insurance arenas.

-- steve

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OneCitizenSpeaking: Saying out loud what you may be thinking …

Reference Links …

BofA balking at paying fees for guarantees: report | Reuters


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