We drew a distinction earlier between the risks to banks and service agents that stem from potential putbacks and the risks that stem from botched foreclosure documents. They are distinct until the moment that foreclosures en masse are declared null and void and the mortgage investor decided to request a putback. That hasn't happened and most likely never will.

So for now, banks are trying hard to get people focused on the different risks faced by a GSE request for a puback and a private investor request for putback of a private-label RMBS.

The conventional wisdom is that GSEs have much more legal power to request this move, while private-label holders are disadvantaged. Analysts seem to have bought into this, according to Deal Journal. Most also feel the private-label risk is manageable. Some were onto this notion weeks ago.

It's fair to say that Bank of America sold way more into GSEs than to private investors. It's also fair to say that the quality of the private-label loans isn't that bad. Some might argue that this discounts the likes of the New York Fed and PIMCO as aggrieved parties. Right now, we only have a lot of posturing on both sides. If it ends up sparking litigation, it's hard to say Bank of America has prevailed.

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