A quickie supposition here. If GMAC’s mortgage arm ResCap is so unfixable that recognized fix-it guy Al de Molina could not fix it, and if Golden West is to Wells Fargo and Countrywide is to Bank of America as ResCap is to GMAC, what do we think is going to happen with those mega-banks?
Put still another way, WFC has $1.1 trillion in off-balance sheet exposure it swears the Federal Housing Administration can fix up if need be. The FHA has to take care of a total 37 million mortgages with about $50b. in reserves. BAC’s Countrywide hangover is still substantial as well. Official policy is to continue to ignore this dreck and hope — pretend? — that the banks can “grow” their way out of this hole.
Put a final way, we are growing a new bubble to replace the old one that popped.
