Financial Markets React Positively to Bank of America Settlement News

By Kyle Chezum Updated on 1/4/2011

1/04/11

Financial markets reacted positively to the news that Bank of America has settled with Fannie Mae and Freddie Mac to the tune of $2.8 billion dollars.  But this settlement is surprisingly small considering the trouble Bank of American has gotten in to over the past few years.

The bank handles close to one third of all mortgage made in the nation over the past decade, and if the cost of settling all mortgage putback requests amounts to less than $3 billion dollars, the total cost to the financial industry likely won’t amount to more than $10 billion.  This means the bulk of the responsibility will fall upon Fannie and Freddie.  This could further destabilize the market in the long run.

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