Dow Diary: Putbacks Put Me Back Below 11,000

Dear Diary,

I am just simply so dadgum irritated. Just had a day of pure sinking; bathed in red from opening bell to closing bell.

The reason might sound familiar to you: Poorly executed legal paperwork all the way down the mortgage chain: from origination and securitization to the forclosure documents themsleves. It’s creating an unsightly, pus-filled pimple on the forehead of American capitalism.

Even though Bank of America and Goldman Sachs reported decent earnings today, pretty much everyone forgot about that good news when Bloomberg reported that some of the nation’s biggest bond investors have started clamoring for their money back on mortgage-backed securities issued by BofA’s Countrywide.

It’s too early to say what will happen, but the report makes for some scary headlines. Among the investors who’re complaining: The Federal Reserve of New York, dominant bond merchant PIMCO and money-managing behemoth BlackRock. And at $47 billion, the size of their claim is no trifle. Bank of America positively plummeted on that news, and ended the day down a discouraging 4.4 percent.

With that kind of action, it’s just getting harder to see this situation the way BofA and JPMorgan Chase, another company in my family, see it. They’re publicly very confident and I like my banks to show some chutzpah, but still. I remember 2008 too well not to get shaky at the prospect of massive mortgage-related charges — however faint they may be.

Feeling POed and a little queasy, need to lie down for a sec,

The Dow Jones Industrial Average

Dow Diary: Putbacks Put Me Back Below 11,000