Will Someone Take the Gag Out of Freddie's Mouth Please?

Why is there a deafening silence emanating from the firms who signed the the notice of non-performanceletter to Bank of America?

Bank of America flag
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Bank of America flag

Representatives from the firms listed on the letter have been incredibly tight lipped: Very little has hit the wire — even on a speculative basis — on the intent, scope, or proposed remedies for the alleged non-performance and misrepresentations. Nearly everyone I contacted was unwilling to talk, even off the record, about the content of the letter. (One helpful source offered to tell me that his firm was, in fact, a signatory to the letter, which had already been made public — but only 'on background'.)

It's probably not a wild leap to suppose that the media relations folks at the financial firms who are a party to the potential action have been well-lawyered not to speak to the press. So it may be a while before we hear about the proposed remedies or damages sought.

The letter states: "Each of these failures to perform is continuing. If they continue for an additional sixty days from the date of this letter, each of them—independently—will constitute an Event of Default." How long before or after that 60 day deadline we may hear about the next steps remains to be seen.

In a broader sense, investors in Bank of America — and every other major bank with potential putback exposure — have every right to be concerned. There is no reason to suspect that this type of action is an anomaly — or that it will be the last major action as well as the first. Perhaps there is some special circumstance that makes this pool of RMBS uniquely radioactive: But if that is the case, no one is talking about it.

Requests for comment made to the law firm who sent the letter, Gibbs & Bruns LLP, were not immediately returned.

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