Egregious but hardly surprising

Consider also recent bank risk-taking. The media has recently reported that Citigroup and Bank of America were buying up some of the AAA-tranches of nonprime mortgage-backed securities. Didn’t the government provide insurance on portfolios of $300 billion and $118 billion on the very same stuff for Citi and BofA this past year? These securities are at the heart of the financial crisis and the core of the PPIP. If true, this is egregious behavior — and it’s incredible that there are no restrictions against it.

Given that Ken Lewis’ strategy for BofA has been to damn the fiscal sanity while proceeding with a strategy intended to gobble up market-share regardless of its actual value (something I witnessed while working there), I’d be inclined to believe it.

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