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The New Stealth Bailout Of Bank Of America

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Bank of America just settled for about $.01 on the dollar.

Joe Weisenthal | Jan. 4, 2011    BusinessInsider

The news that Bank of America had settled its putback exposure with the GSEs sent the stock surging 7% yesterday.That kind of move has lots of folks screaming bailout. As Barry Ritholtz and Colin Barr at Fortune point out, Bank of America just settled for about $.01 on the dollar. 

Says Chris Whalen of Institutional Risk Analytics: “This looks to me like a gift from Tim Geithner… there’s politics all over this.”

This is almost certainly true, but also not shocking at all, given the potential ramifications of any serious hit to the banks‘ balance sheets.

Of course, this isn’t the end of the story, and Bank of America still has its massive exposure to non-agency MBS holders, including PIMCO, the New York Fed, and the Monolines, like MBIA.

Click here for a guide to Bank of America’s possible exposure >

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