POLITICAL observations & opinions

* FHFA to sue banks for misrepresenting the quality of mortgage securities they assembled and sold at the height of the housing bubble … YES !!! … does this indicate signs of life in the Obama administration?

Posted by Lew Weinstein on September 2, 2011

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Nelson Schwartz writes in the NYT (9/1/11) …

  • The federal agency that oversees the mortgage giants Fannie Mae and Freddie Mac is set to file suits against more than a dozen big banks, accusing them of misrepresenting the quality of mortgage securities they assembled and sold at the height of the housing bubble, and seeking billions of dollars in compensation.
  • The Federal Housing Finance Agency suits, which are expected to be filed in the coming days in federal court, are aimed at Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, among others, according to three individuals briefed on the matter.
  • The suits will argue the banks, which assembled the mortgages and marketed them as securities to investors, failed to perform the due diligence required under securities law and missed evidence that borrowers’ incomes were inflated or falsified.
  • privately, financial service industry executives argue that the losses on the mortgage-backed securities were caused by a broader downturn in the economy and the housing market, not by how the mortgages were originated or packaged into securities.
  • Bank officials also counter that further legal attacks on them will only delay the recovery in the housing market, which remains moribund, hurting the broader economy.

read the entire article at … http://www.nytimes.com/2011/09/02/business/us-is-set-to-sue-dozen-big-banks-over-mortgages.

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2 Responses to “* FHFA to sue banks for misrepresenting the quality of mortgage securities they assembled and sold at the height of the housing bubble … YES !!! … does this indicate signs of life in the Obama administration?”

  1. Lew Weinstein said

    Welcome to the blog, Frank … although you know I disagree with you. The banks caused the mortgage problem, along with the financial markets , and yes, those who encouraged home ownership for everyone whether they could afford it or not (this includes some Democrats). Some was policy, but some was simply illegal. People should be held responsible for their actions. If not, they will do what greed suggests, with no restriction. We DID bail out the banks, including with money from those who were hurt by their actions. It’s time for an accounting.

  2. Frank Feld said

    This is lunacy! Suing the banks now is suicidal for the US Economy. The only way the economy can heal itself, is if the banks are allowed to recover from near bankruptcy.

    Blaming banks as the sole culprit of the mortgage mess is like blaming Jews for Germany’s economic depression in the 1930’s.

    This is nothing worse than a populist lynch mob that is driected towards the folks with money

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