News Stories

Banks are in Trouble for Mortgage Scams

If you've been a victim of a widespread mortgage scam, you'll be glad to know that banks are not getting away with it. The federal agency that runs Fannie Mae and Freddie Mac is getting ready to file suits against a dozen big banks for misrepresenting the quality of mortgage securities they assembled and sold at the height of the housing bubble, saying that they failed to perform due diligence and thus ignored evidence that borrowers' incomes were either inflated or falsified (something that the banks themselves encouraged). The government is asking for BILLIONS of dollars in compensation.

We bailed out the banks, but did they deserve it? Now the government is trying to get some of that money back with lawsuits. The first-ever audit of the US Federal Reserve reveals that the government handed out 16 TRILLION dollars in secret bank bailouts from late 2007 through 2010. The Federal Reserve, like the post office, is a quasi-private agency that doesn't always reveal what it's doing.

In the September 1st edition of the New York Times, Nelson D. Schwartz quotes former Fannie Mae executive Tom Rood as saying, "While I believe that FHFA is acting responsibly in its role as conservator, I am afraid that we risk pushing these guys off of a cliff and we’re going to have to bail out the banks again."

On the Interpress News Service, Matthew Cardinale quotes US Senator Bernie Sanders (an Independent from Vermont) as saying, "This is a clear case of socialism for the rich and rugged, you're-on-your-own individualism for everyone else."

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Probably not. The feds have been trying, unsuccessfully, to get several states who have lawsuits of their own to back off.

What's likely to happen is that the Feds will settle their lawsuits for a pittance, something that they have already done with several SEC lawsuits. And since Federal Law trumps state law, the banks will be again protected from lawsuits by state attorney generals.

The banks win again, and we all lose.

Even though I live in Europe this "bankster bailout business" allmost pisses me off. But so does hiphop, crime tv, crysis unawareness and a lot of other stuff everybody loves.

I'm with you Gerald. The timing is interesting as the election session begins. The powers that be must be aware of how angry many of us are over the bankster bailout coupled with all the illegal activities before and after. No one has answered for any of it so perhaps they feel a need to show some activity on that front to head off potentialy more serious/real action by others. It is one of the few issues that left-right-center folks agree on and that is a need that justice be served. Though there is a warning that "we risk pushing these guys off of a cliff..." and then having to bail them out again for our own sake. Amazing how delicate/fragile these huge wealthy entities are? I believe we need to do what should have been done at the beginning and has been done in the past in other responsible countries(Sweden)-government takeover then pairing down the organization separting good assets from the bad, layoffs of top decision makers, salary cuts for the upper levels, establish conservative historicaly proven banking practices, withdraw from derivitive contracts(weapons of mass finantial destruction-Buffet) and so on. You know real finantial reform as happen after the last great depression.

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