It's About Time!!!!!

[TampaYankee]

U.S. to sue big banks over mortgage securities: report

WASHINGTON (Reuters) - The agency that oversees mortgage markets is preparing to file suit against more than a dozen big banks, accusing them of misrepresenting the quality of mortgages they packaged and sold during the housing bubble, The New York Times reported on Thursday.

The Federal Housing Finance Agency, which oversees mortgage giants Fannie Mae and Freddie Mac, is expected to file suit against Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, among other banks, the Times reported, citing three unidentified individuals briefed on the matter.

The suits stem from subpoenas the finance agency issued to banks last year. They could be filed as early as Friday, the Times said, but if not filed Friday it said the suits would come on Tuesday.

The government will argue the banks, which pooled the mortgages and sold them as securities to investors, failed to perform due diligence required under securities law and missed evidence that borrowers' incomes were falsified or inflated, the Times reported.

Fannie Mae and Freddie Mac lost more than $30 billion, due partly to their purchases of mortgage-backed securities, when the housing bubble burst in late 2008. Those losses were covered mostly with taxpayers' money.

The agency filed suit against UBS in July, seeking to recover at least $900 million for taxpayers, and the individuals told the Times the new suits would be similar in scope.

A spokesman for the Federal Housing Finance Agency was not immediately available for comment.

The Times said Bank of America, JP Morgan and Goldman Sachs all declined comment. A Deutsche Bank spokesman told the Times, "We can't comment on a suit that we haven't seen and hasn't been filed yet."

The practice of subprime lending, wherein mortgage brokers lowered their standards to entice homebuyers to take out large mortgages to buy more expensive homes than they could afford, was a root cause of the mortgage market implosion.

News of the suit could have a negative impact on stocks of the banks in question on Friday. JPMorgan Chase, Bank of America and Goldman Sachs are traded on the New York Stock Exchange, while Deutsche Bank is traded on the German exchange.

S&P 500 stocks index futures were trading down 0.6 percent in Asia. U.S. Treasury futures also ticked higher..

The Times report said investors fear that if banks are forced to pay out billions for mortgages that defaulted, the suit could sap earnings for years and contribute to further losses across the financial services industry.

See oringal article at:

http://news.yahoo.com/u-sue-big-banks-over-mortgage-securities-report-031719348.html

[Guest hitoallusa]

Why now? That's the question I am wondering about. Do you guys have any ideas.

[TampaYankee]

It's about time -- long over due actually.

Unfortunately, it appears the government is seeking penalties nowhere consistent with the damage done and the money stolen from Fannie, Freddie, Pension Funds, Mutual Funds and individual investors. Better something than nothing though.

If the penalties eat in to company dividends then that is just tough. The stock holders should be greatful and satisified that they haven't lost all of their equity that the bailout saved them from. There ought to be some penality for corporate malfeasance that amounts nothing less than fraud and grand larceny.

It's criminal that these guys aren't doing hard jail time for RICO violations. The Obama DOJ ought to be ashamed for not pursuing them criminally. ANother case where money talks. The Democratic Party is little better than the GOP when it comes to doing Wall St and Big Bank bidding.

We are lucky to get any satisfaction

[Guest Anton]

Hey TY,

Thanks for posting this. A few weeks ago I saw the movie "Inside Job" which is more a documentary than a movie and it explains how things went so wrong.

There were banks and investment companies that bought these "packaged mortgages". After seeing the movie I really wondered why these banks and investment companies didn't sue the banks that and managers who had sold them something that in the end was smelling really bad.

Well, if I were a bank or investment company, I'd now lay back and wait for the result of the suit case of te Federal Housing Finance Agency. If the result of that court case is that the packaged mortgages indeed had been misrepresented, I'd have lots less evidence to cough up. That's the moment I'd start my own court case.

Nevertheless, and especially after seeing "Inside Job" I genuinly think that the individuals responsible for what happend must face trial as well. I'm not convicting anyone yet, but I'm saying that they have to face court and justify what they did. If they can justify their behaviour, they're fine, but if not, they're in trouble.

What I try to express is that there's nothing wrong with someone justifying his actions. If found guilty, the millions that they received as a salary for this deception must be used to pay it to those who suffered as compensation for their losses.

On that point I also love what the japanse do. If a CEO or manager screws up, he has to apologise in person in front of all those who suffered from what he did. Next to the legal consequence we already have in the west, I think we really must do that too. If you screw up, you apologise to those you harmed!

Sincerely, Anton.

[TotallyOz]

I agree and wonder why it took so very long?

[BiBottomBoy]

It took so long because everyone involved wanted it to happen as the election cycle starts to heat up.

The GOP wants it now so they can fund raise from the banking industry and Obama wants it now so people will see he's doing something and get some bumps in the polls.