So, what’s this? Another charade? Did Geithner or Bernanke suggest, “Hey Barack we’ll fix it, we’ll just file a big lawsuit against everybody and then we’ll cut a deal that let’s the banks off the hook for everything for the $20 billion the AG’s won’t settle on…”
Published: September 1, 2011
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 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. [CONTINUE READING on NY Times]
By DEADLY CLEAR
C’mon Obama don’t you guys in Washington realize the public has figured you out. Besides, settling for $billions isn’t enough.
Start with $5 TRILLION and maybe the public will sit up and listen – and we [the public] don’t care if they [the banks] have to pay it back over 5 years with no profits for their shareholders as long as we have a priority position on their assets when they go bankrupt.
If the government wants to file criminal charges against the banks with no deals and use the taxpayers money – I’ll personally support it… but just to continue to file lawsuits and clog up the courts or agree to lame settlements is a waste of good money. Why would we even give them a deal – its not like their going to rat each other out or turn state’s evidence.
If Fannie and Freddie were lied to by the banks (which is doubtful because they were apparently in on all of this) then certainly so were the borrowers. The banks’ lies stem from inflated appraisals, systematically abandoned underwriting guidelines and over-rated bonds…NONE of which the borrowers had any control over!
This is what appears to have happened… the banks never placed the loans in the Trusts – the Trusts were empty. For example, Eric Schneiderman’s New York Complaint against The Bank of New York Mellon, et. al. alleges:
“BNYM Was Aware Of the Trusts’ Failure To Transfer Loans. The ultimate failure of Countrywide to transfer complete mortgage loan documentation to the Trusts hampered the Trusts’ ability to foreclose on delinquent mortgages, thereby impairing the value of the notes secured by those mortgages. These circumstances apparently triggered widespread fraud, including BoA’s fabrication of missing documentation.”
And Allstate v. Countrywide, et. al., 10-CIV 9591 filed on December 27, 2010 in the U.S. District Court of the Southern District of New York has claimed that the prospectuses contained untrue statements and omissions of material facts, in violation of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (the “1933 Act”); Sections 10(b) and 20(a) of the Securities and Exchange Act of 1934 (the “1934 Act”); and common-law fraud and negligent misrepresentation.
When you take into consideration the allegations against the banks – ya gotta wonder if the investors ever looked into what they were purchasing, yeah? If the loans were not in the Trusts… did the investor know that the mortgage loans had not been consummated when they handled over their trust funds? What would make you so confident that you would hand over millions and billions of public funds without looking at what you were actually purchasing? Did the investors ever even review any of the mortgage documents?
It’s highly unlikely since the loans never made it into the Trusts and in most cases the borrowers hadn’t even signed the mortgage documents until a few days before the Trust closed – how plausible is it that the Prospectus and thousands of pages of formulas and data could be compiled printed and sold in a matter of days? Not likely, right?
So … Did the promise of insurance even in the event of a default cover that base of insecurity? Did the investors also expect the loans to fail? God help them if they ever get to a jury trial because these aren’t rocket science questions – they’re just logical queries.
The best thing to do is strip ALL the mortgage loans, including REOs, written for the last decade from the banks; have the states take them over and reconstruct them with the borrowers at 0%-2% for 30 years and start creating the desperately needed revenues, in lieu of litigation.
Even if we just look at the 67 million MERS mortgages X $900 a month X 1 year = $723,600,000,000 which is a lot more than the government would see in a settlement and it could bring in revenue for another 30 years.
“Billions still sounds like a lot, yeah Tim… right, Ben?” Give me a break!