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Pimco: $25 Billion Foreclosure Deal to Hit Pensions Harder Than Banks

by on February 12, 2012

Another ‘victimless crime’ by the government. Yet in this case, there are victims- the millions of people who participate in employer 401k plans. Of course they won’t realize they are victims and may never know the government brokered a deal to have them shoulder the responsibility instead of lenders with shady lending practices who once again get to deal from the bottom of the deck.

Asset managers are frustrated with the deal because, in addition to the debt the banks own, it gives credit to the lenders for changes to loans they hold no interest in and oversee for investors. That “treats people’s 401(k)s and pensions,” which hold mortgage securities, “like perpetrators as opposed to victims,” Simon said. The deal comes after all 50 states announced a probe into foreclosures in 2010 following disclosures of faulty documents used to seize homes, costing bondholders as liquidations of bad debt were delayed.

“Think about this, you tell your kid, ‘You did something bad, I’m going to fine you $10, but if you can steal $22 from your mom, you can pay me with that,’ ” Simon said yesterday in a telephone interview from Newport Beach, California.

From → Taxes, Wealth

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