Friday, September 02, 2011

Banksters To Prison? Don't Get Your Hopes Up


Enemies of society, unpunished predators & sociopaths

Pretty late last night, the NY Times ran-- or dumped-- a story that seems like a humongous big deal: U.S. Is Set to Sue a Dozen Big Banks Over Mortgages. It's the Federal Housing Finance Agency going after Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank... and some others. Hard to imagine this is for real.
The suits stem from subpoenas the finance agency issued to banks a year ago. If the case is not filed Friday, they said, it will come Tuesday, shortly before a deadline expires for the housing agency to file claims.

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. When many borrowers were unable to pay their mortgages, the securities backed by the mortgages quickly lost value.

Fannie and Freddie lost more than $30 billion, in part as a result of the deals, losses that were borne mostly by taxpayers.

In July, the agency filed suit against UBS, another major mortgage securitizer, seeking to recover at least $900 million, and the individuals with knowledge of the case said the new litigation would be similar in scope.

Private holders of mortgage securities are already trying to force the big banks to buy back tens of billions in soured mortgage-backed bonds, but this federal effort is a new chapter in a huge legal fight that has alarmed investors in bank shares. In this case, rather than demanding that the banks buy back the original loans, the finance agency is seeking reimbursement for losses on the securities held by Fannie and Freddie.

The impending litigation underscores how almost exactly three years after the collapse of Lehman Brothers and the beginning of a financial crisis caused in large part by subprime lending, the legal fallout is mounting.

Besides the angry investors, 50 state attorneys general are in the final stages of negotiating a settlement to address abuses by the largest mortgage servicers, including Bank of America, JPMorgan and Citigroup. The attorneys general, as well as federal officials, are pressing the banks to pay at least $20 billion in that case, with much of the money earmarked to reduce mortgages of homeowners facing foreclosure.

And last month, the insurance giant American International Group filed a $10 billion suit against Bank of America, accusing the bank and its Countrywide Financial and Merrill Lynch units of misrepresenting the quality of mortgages that backed the securities A.I.G. bought.

The banksters are countering-- and this is a message that will be echoed by the Republican Party, corporate Democrats and the corporate media-- that "legal attacks on them will only delay the recovery in the housing market, which remains moribund, hurting the broader economy." Never mind that these legal attacks could be completely justified and that the culprits should be seperated from their ill-gotten gains and be imprisoned so they can't harm society again. I bet Limbaugh will be screaming his head off about this today. I'm eager, on the other hand, to hear what Bernie Sanders has to say, since I doubt Eric Schneiderman will say anything at this point.

UPDATE" $105 Billion? That Sounds About Right

Looks like no one's going to prison but $105 billion's a lot. And the suit was filed again Ally Financial Inc, Bank of America Corporation, Barclays Bank PLC, Citigroup, Countrywide Financial Corporation, Credit Suisse Holdings (USA), Deutsche Bank AG, First Horizon National Corporation, General Electric Company, Goldman Sachs & Co, HSBC North America Holdings, JPMorgan Chase & Co, Merrill Lynch/First Franklin Financial Corp, Morgan Stanley, Nomura Holding America Inc, The Royal Bank of Scotland Group PLC and Société Générale.

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