Bloombergreports this morning that Pacific Investment Management Co, BlackRock Inc and the Federal Reserve Bank of New York are seeking to force Bank of America Corp to repurchase soured mortgages packaged into $47 billion of bonds by its Countrywide Financial Corp unit.
The New York Fed acquired mortgage debt through its 2008 rescues of Bear Stearns and American International Group Inc. The shoddy management of the packaging of so-called “securitised” loans has the potential to disrupt again the American banking industry.
As if that was not enough bad news, commercial real estate prices (as measured by Moody’s/REAL All Property Type Aggregate Index) fell over 10% over the last three months. The index is now down 45.1% from the peak in October 2007 and at a new cycle low — the lowest prices since 2002.