US Federal Agency to sue big banks over mortgage securities

The US Federal Housing Finance Agency or FHFA is to sue the biggest banks that operate in the United States over misrepresenting the quality of mortgages they packaged and sold in the housing bubble

edited 2nd Sep '11 6:04:01 AM by whaleofyournightmare

Asset forfeitures ahoy!

edited 2nd Sep '11 6:52:01 AM by SavageHeathen

Try this one, which I was going to post when you beat me to it: [1] Seems that robo-signing is far more prevalent than originally thought and dates back as far as 1998.

Is there no end to the banks' perfidy? This could cost far more than the $20 billion state settlement that was in the works, especially since it threatens not only lawsuits but also the principal of the loans themselves. Fraudulently signed documents can get foreclosures thrown out of court, giving mortgage holders their homes for free.

As an aside, I'm tempted to ask the county registrar to review the paperwork on mine...

Also, I fail to see how this cannot be considered criminal.

edited 2nd Sep '11 7:39:55 AM by Fighteer

@Fighteer: It's because they're too big. Drunkscriblerian has been fighting Bank of America over how they've mishandled his mortgage since he separated from his (now) ex-wife. He's talked to lawyers about his options, and the lawyers basically told him not to bother, because he can't out-spend them in court, or because his suit would get lumped into a class-action suit and he'd be paying off lawyer fees while the bank still seized the house.

@Fighteer, when you have a weak regulatory body, organisations will act like a law onto themselves. But yeah if you think the paperwork is iffy, go get it checked.

I have no reason to suspect that it's iffy, but it would be interesting to find out. I'm 50% underwater anyway, and many's the time I've considered walking away; this would give me a pretty good excuse.

USA Today story

Original Reuters story, a shorter version of which is on Yahoo

How hard can the banks fight this and how far can the government go? This could be insanely popular, politically.

How can you say that? Our banks are pillars of the financial community, tirelessly working to maximize their own profits at the expense of consumers. The Almighty Free Market has spoken!

I'm willing to bet the average American wouldn't piss on a banking executive if the executive was on fire. And you offered to pay him for it. And asked really nicely.

The more I hear about the mortgage mess the more I'm glad that when we moved I said "We are only buying as much house as we can afford in cash."

Well actually the weak regulatory body is the reason why it's not considered criminal. Financial law is iffy as is but if you have no watchdog, anything flies. I'm not even sure how this court case got off the ground.

Aw, I was gonna post this after reading it on my I-pod this morning but I couldn't get on until today.

Pros:

• May recover the money spent bailing out these banks in the first place
• May teach the banks a lesson about engaging in fraudulent and dangerous business practices (not likely)
• Politically popular
  • Sends out the message that banks are not above the law

Cons:

• Might collapse the banks
  • Might require more bailouts, which would just be silly

Ah that would be heavily ironic. Sue them successfully for 100 billion and then give them a bail out of 100 billion to pay it.

Can we please nationalize them in the process if we do that? I mean, we can sell the banks back to the private sector at some point-liquidating them to pay off the debt?-but it's just so goddamned stupid to just throw money at them and say "AWP, HERE YA GO!"

Nationalize? Nah. Break them into little chunks like the monopolistic trust-esque bastards they are? I'll get my Roosevelt-grade TRUST BUSTER HAMMER!

The banks can rot under so many taxes they don't know what hit them, so much as I care...

That would impede our economy. If we nationalize them, then all the profits go towards generating revenue. If we have protests of SOCIALISM!!!!!!11111 we can say that the banks are for sale to private enterprise, but that as with everything, there's a cost involved.

It's better than just bailing out the banks every time, letting the people actually making the decisions to avoid any cost from their decisions.

I prefer to sidestep nationalization when possible, thank you...

But but nationalisation can be good. Dont make me get mah list out of NHS firsts vs USA healthcare firsts.

I would prefer a system where the market is simply regulated to be free, rather than a government monopoly.

A monopoly is a monopoly, efficient or not...

The problem is that if banks fail, your economy is seriously screwed. If you bail them out, that's ''already' circumventing market forces.

And someone has to pay for it. You can't tax the bankers money that they don't have-that's why they're failing. You could however have made the bail-outs in the form of loans.

I like the idea put forward that the banks be taxed for a fund that would be used to bail-out the banks when they fuck up. Like Social Security for banks, I guess...

I don't really understand why the government ever bails out anything with zero interest 'loans' in the first place. If nothing else, it makes a wonderful talking point for the political opposition, and it's not like a couple points of interest, even if only for the principle of the thing would sink any ships in business, would it? Why isn't there more drive in Washington to place consequences of failure on the backs of 'too big to fail' businesses? I would think it would be a popular rallying point, maybe even a centrist one if worded carefully.

Yeah, honestly, the administration needs to go after the banking industry, because it's become the new boogieman (and not without good reason).

Or you could make everybody happy, and nationalize the banks then open the doors to investigators to find all the fraud, then once that is done and it's stable, then you break the bank into itty bitty bits and roll it back out to the public via IPO auctions.

It's the best of both worlds!

The reason the banks were bailed out was because there's too many companies that rely on short-term loans in order to fund basic operations. Now, I'd be happy with a short-term government run bank in order to run those lines of credit, but needless to say that was impossible politically.

Edit: I should point out that by "nationalize the banks" I don't mean nationalize ALL the banks. There were banks that are better off and banks that are worse off. It's the banks that were basically on death's door that should have been nationalized. You need a bailout? Sure. But your shareholders get zeroed out. So sorry.

edited 2nd Sep '11 3:14:27 PM by Karmakin

You don't have to nationalize them to check for fraud. FDR did it, we can do it.

I don't want to nationalize them because I don't expect them to become un-nationalized, and I don't think that the government should control the banking system...