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Government Prepares To Sue Banks Over Mortgages

WASHINGTON, Sept. 2 (UPI) — The federal government will sue a dozen U.S. banks, charging they misrepresented the quality of mortgage securities sold in the housing bubble, insiders said.

The Federal Housing Finance Agency lawsuits, expected to be filed soon in federal court, target Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, among others, three people knowledgeable about the matter told The New York Times.

The lawsuits arise from subpoenas the FHFA issued to banks a year ago and seek billions of dollars in compensation, the Times reported Thursday.

The FHFA oversees mortgage giants Fannie Mae and Freddie Mac, which reported losing more than $30 billion because of the deals. The losses were borne mostly by taxpayers.

The lawsuits were to be filed either Friday or Tuesday, shortly before a deadline expires for the housing agency to file claims.

The suits allege the financial institutions, which assembled the mortgages and marketed them as securities to investors, didn’t perform the due diligence required under securities law and missed evidence that borrowers’ incomes were either inflated or falsified.

When the housing bubble burst, many borrowers couldn’t pay their home loans and the securities backed by the mortgages plunged in value.

 

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  • DanB

    I wish I could say, “Unbelievable!” Unfortunately, this is completely believable.

    So what should be unbelievable? We are going after the symptoms and incriminating those that were obligated to play by the government’s rules or be lobbied against, investigated, and all sorts of strong arm tactics to encourage them to do these risky loans. Americans apparently wanted risky loans. We were all over these programs and would threaten any who said they were too risky. And now we are making them into criminals after they played by OUR rules and OUR game??? Totally missing the problem for the symptoms! If the government is going to sue anyone over the bad loans that led to the mortgage crisis, here’s a good list:

    - Community organizers (they led groups to pressure banks)
    - Politicians (also pressured banks as well as wrote the rules to encourage bad loans)
    - Regulators
    - Fannie and Freddie
    - The American people

    Are we not just as guilty? We blindly followed the organizers instead of taking a clue from the banks who initially said “no” until we forced them to go along. We elected politicians and believed the baloney that there was nothing wrong with Fannie and Freddie or giving loans to those who could not afford them. And those politicians we elected created a system of regulators that failed to do even the most basic oversight over and over again, yet we continued to elect the politicians to create more of these failed oversights??? Come on! We the people need to wake up and take a dose of reality! If we had been a responsible people, we would start with accepting that we needed to stop blindly following community organizers and we also needed to stop blindly voting in politicians that gave us wonderful words to hear but their actions were poison to our future.

    Over the past couple years, I have stopped listening much to a President that is nothing more than the ultimate example of what is wrong with the American people. Just as everything is mysteriously not his fault and inherited from someone, somewhere, else. So too it is with the American people. As a nation, we are looking for others to do what we should do ourselves and we are looking for scapegoats for own foolishness, denying that we have any personal problems.

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