Whoops!

We kinda thought that Countrywide wasn't very on the up-and-up, but it looks like Bank of America is going to be very, very sorry they ended up taking over that company. 

If the notes and mortgages were not properly transferred to the trusts, then the mortgage-backed securities that the investors’ purchased were in fact non-mortgage-backed securities. In such a case, investors would have a claim for the rescission of the MBS, meaning that the securitization would be unwound, with investors receiving back their original payments at par (possibly with interest at the judgment rate). Rescission would mean that the securitization sponsor would have the notes and mortgages on its books, meaning that the losses on the loans would be the securitization sponsor’s, not the MBS investors, and that the securitization sponsor would have to have risk-weighted capital for the mortgages. If this problem exists on a wide-scale, there is not the capital in the financial system to pay for the rescission claims; the rescission claims would be in the trillions of dollars, making the major banking institutions in the United States would be insolvent.

What fun!  Maybe we can bail out a few more banks.  Such a great use for our tax money.  But I am sure when the Republicans promoted deregulation of financial institutions they didn't mean for something like this to happen.  After all, greed is good, right?