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$25 Billion Foreclosure Deal to Hit Pensions Harder Than Banks

muleman

Gone But Not Forgotten
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Tags: pimco | foreclosure | banks | pensions


Pimco: $25 Billion Foreclosure Deal to Hit Pensions Harder Than Banks



Friday, 10 Feb 2012 10:04 AM




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The government’s deal with banks over their foreclosure practices after 16 months of investigations is cheap for the loan servicers while costly for bond investors including pension funds, according to Pacific Investment Management Co.’s Scott Simon.
In what the U.S. called the largest federal-state civil settlement in the nation’s history, five banks including Bank of America Corp. and JPMorgan Chase & Co. yesterday committed $20 billion in various forms of mortgage relief plus payments of $5 billion to state and federal governments.
“This was a relatively cheap resolution for the banks,” said Simon, the mortgage head at Pimco, which runs the world’s largest bond fund. “A lot of the principal reductions would have happened on their loans anyway, and they’re using other people’s money to pay for a ton of this. Pension funds, 401(k)s and mutual funds are going to pick up a lot of the load.”
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Asset managers are frustrated with the deal because, in addition to the debt the banks own, it gives credit to the lenders for changes to loans they hold no interest in and oversee for investors. That “treats people’s 401(k)s and pensions,” which hold mortgage securities, “like perpetrators as opposed to victims,” Simon said. The deal comes after all 50 states announced a probe into foreclosures in 2010 following disclosures of faulty documents used to seize homes, costing bondholders as liquidations of bad debt were delayed.
“Think about this, you tell your kid, ‘You did something bad, I’m going to fine you $10, but if you can steal $22 from your mom, you can pay me with that,’ ” Simon said yesterday in a telephone interview from Newport Beach, California.
Borrower Aid
Government officials say the costs will be “funded primarily by the banks, not third-party investors,” according to a statement posted yesterday on a website created for the settlement. The five banks will get different amounts of credit for various types of borrower aid, with loans in government- backed mortgage bonds exempted.
The $250 billion Pimco Total Return Fund last month was 50 percent invested in mortgage debt, typically government-backed securities, according to its disclosures. It also owns home-loan bonds in private funds for institutional clients.
Scott has said for more than two years that Pimco supports the greater use of principal cuts on debt that exceeds homes’ values. It isn’t clear how often reductions for individual borrowers sparked by yesterday’s deal will be large enough to help, he said.
Laurie Goodman, the Amherst Securities Group LP analyst who has advocated for mortgage forgiveness in testimony to Congress, joined him in criticizing the agreement yesterday.
“There is no one who has been more vocal in support of principal reduction than I have been,” she said in a telephone interview. “There is a difference between principal reductions and giving banks credit for spending others’ people money.”

© Copyright 2012 Bloomberg News. All rights reserved.
 

300 H and H

Bronze Member
GOLD Site Supporter
Asset managers are frustrated with the deal because, in addition to the debt the banks own, it gives credit to the lenders for changes to loans they hold no interest in and oversee for investors.

Now that sounds fair doesn't it???

and this...

“This was a relatively cheap resolution for the banks,” said Simon, the mortgage head at Pimco, which runs the world’s largest bond fund. “A lot of the principal reductions would have happened on their loans anyway, and they’re using other people’s money to pay for a ton of this. Pension funds, 401(k)s and mutual funds are going to pick up a lot of the load.”

SO the guys that dreamed up the home loan as a "securuty" are now going to dump the burden of their poor judgement on to the investor who thought he was doing good in the world with his/her money...

The Banksters win again....

Score, the Banksters yet another win over the american people and the two party system, they now OWN. Notice the same bank names keep appearing over and over again. Funny how they are also the ones that are on the to big to fail list.....

I caann't help but get pissed at these guys....:hammer::hammer:

Regards, Kirk
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Kane

New member
So instead of going to jail, the Fraudsters and Banksters are once again let of the civil and criminal hook with pocket-change restitution, payable once again upon the backs of others. Sweet.

But what can you or I do about it, with one-man, one-vote?

Frustrated yet?
.
.
 

joec

New member
GOLD Site Supporter
So instead of going to jail, the Fraudsters and Banksters are once again let of the civil and criminal hook with pocket-change restitution, payable once again upon the backs of others. Sweet.

But what can you or I do about it, with one-man, one-vote?

Frustrated yet?
.
.

I've been frustrated with this countries politics for the better part of 40 years now and it is only getting worse. One man, one vote is a joke today as you have two choices in the end which are the flip side of the same coin.
 

300 H and H

Bronze Member
GOLD Site Supporter
So instead of going to jail, the Fraudsters and Banksters are once again let of the civil and criminal hook with pocket-change restitution, payable once again upon the backs of others. Sweet.

But what can you or I do about it, with one-man, one-vote?

Frustrated yet?
.
.


Yes I was untill I started listening to Ron Paul and read some things on my own about the Federal Reserve System. He is the only choice we have that gets it. You have to fix this problem, or nothing else you do will matter. He is for today...you can still contribute to his effort by the way.

But Ran is the one for the future if it is still possible to salvage, and the people start to actually wake up. Time will tell, but I can tell you I am already in his camp. Every one else is OWNED by the Banksters, just look at their contibutors, and both parties are well represented....:hammer::hammer:

Regards, Kirk
 

joec

New member
GOLD Site Supporter
Yes I was untill I started listening to Ron Paul and read some things on my own about the Federal Reserve System. He is the only choice we have that gets it. You have to fix this problem, or nothing else you do will matter. He is for today...you can still contribute to his effort by the way.

But Ran is the one for the future if it is still possible to salvage, and the people start to actually wake up. Time will tell, but I can tell you I am already in his camp. Every one else is OWNED by the Banksters, just look at their contibutors, and both parties are well represented....:hammer::hammer:

Regards, Kirk

You might check to see who the money backers of Ran are if you think he is anything like his father. I like much of what Ron Paul says just not all of it, but his son on the other hand not so much on any level.
 

300 H and H

Bronze Member
GOLD Site Supporter
Maybe so Joe, maybe so

I am not as familiar with him. Mostly what I know is about his father.

Regards, Kirk
 

tiredretired

The Old Salt
SUPER Site Supporter
“There is a difference between principal reductions and giving banks credit for spending others’ people money.”

What a friggin' sham. If it wasn't so sickening it would be funny at how our government operates.
 
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