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Because management at Countrywide turned out to be thieving goons, Bank of America (BAC) is stuck with mortgages which should never have been granted by the huge housing lender.

As they must do to keep their jobs, state attorneys general went after Countrywide for bilking homeowners into buying houses which they could not afford, causing serial defaults. It does not seem to matter that the people who wanted the mortgages refused to do the math on what they could afford.

According to The Wall Street Journal, Bank of America will buy off the state legal authorities for just over $8 billion. ".The deal will cover nearly 400,000 borrowers, Bank of America announced on Monday. It will apply to borrowers who took out subprime loans with adjustable or fixed interest rates, as well as those with option adjustable-rate mortgages that are serviced by Countrywide."

The deal has several glaring weaknesses. Not all of the states suing Countrywide have agreed to the arrangement. It also does not keep individual homeowners from forming a class action suit against the bank.

Most importantly, it is not clear how the money gets to those 400,000. The bureaucracy required will be enormous. Deciding exactly who qualifies will be impossible.

The settlement papers over the real problem. The little guy is still thrown out of his house and winds up living on the street.

Douglas A. McIntyre