Robbing Peter to pay Paul – Ally pays Fannie for stuffing them with bad loans

Is it only me or is this a weird report? Both of the protagonists are majority owned by the US taxpayer, and yet they settle debts in order to hide the disclosure of the true amounts of bad loans which Ally (the bank formerly known as GMAC)  stuffed into RMBS’ which have been sold to Fannie Mae.

ABC reports in Ally Financial in $462 Million Settlement With Fannie:

Ally Financial Inc, the lender formerly known as GMAC, on Monday said it agreed to pay $462 million to Fannie Mae to avoid having to repurchase poorly underwritten mortgages sold to the housing finance giant…

Ally, which is expected to go public next year, announced a smaller settlement with Freddie Mac in March. Resolving questions about its potential liability could help Ally attract investors.

The lender, which is 56 percent owned by the U.S. government, said the agreements reduce the risk in its mortgage operations going forward.

Is this just a way for the US government and its hedge fund partners in Ally to clean up the books and lower risk so as to polish up the IPO? As a result of the settlement neither Ally nor Fannie Mae need to make adjustments for the crap mortgages on their balance sheets … at this time.

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