Bank of America (NYSE: BAC) has a mess on it’s hands. The firm badly missed earnings estimates, is struggling to cope with the new Dodd Frank financial reform legislation, and was all over the news recently for the mortgage debacle.
What does the firm do to right the ship? They’re going to the mattresses, and bringing in a former Attorney General of Virginia to help them. In addition, they have contract a number of law firms with deep Washington experience to help defend against a probe by U.S. states into its foreclosure practices.
Richard Cullen, chairman of the McGuireWoods law firm and Virginia attorney general from 1997-1998, is one of the lawyers representing the nation’s largest mortgage servicer. Cullen has already been communicating with the offices of various state attorneys general, according to a source familiar with the investigation. Cullen served on the legal team that represented President George W. Bush’s during the Florida vote recount after the 2000 presidential election. He also represented Republican Tom DeLay in a recent federal probe that did not result in any charges being filed.
Attorney Generals in each of the 50 states have announced a probe of the banking industry amid reports of faulty foreclosure affidavits submitted to U.S. courts. Bank of America is not alone though, JPMorgan Chase (NYSE: JPM) has also been highly criticized over their foreclosure process, as has Wells Fargo (NYSE: WFC) and others. Nicholas Gess, a former Department of Justice attorney who worked with state attorneys general commented, “It makes a lot of sense for a company to hire people who have concentrated experience in dealing with state AGs.”
Bank of America is clearly preparing for a battle, and is lining up the right forces to do so. Using ‘robo-signers’, people who sign hundreds of foreclosure documents each day is not an issue the Feds or banks really want to be dealing with – they would much prefer people pay their loans so they can collect their profits and not sit with idle, low value real estate. But, this is the state of the economy, and the banks are going to get innovative as they always do to defend themselves.
