EMAIL SIGN UP!
Most Popular This Week
- US Is an Oligarchy Not a Democracy, says Scientific Study
- Krugman: Worried About Oligarchy? You Ain't Seen Nothing Yet
- Pulitzer Vindicates: Snowden Journalists Win Top Honor
- Study: Fracking Emissions Up To 1000x Higher Than EPA Estimates
- Hillary Clinton and the Future Failure of Progressive Hope and Change
Today's Top News
Report: US to Sue Banks Over Mortgages
The United States plans to file lawsuits against more than a dozen big banks over mortgage-backed securities seen to have fueled the 2008 economic crisis, the New York Times said.
The lawsuits are set to be filed Friday or early next week against Bank of America, JP Morgan Chase, Goldman Sachs, Deutsche Bank and others, the newspaper reported, citing three unnamed individuals briefed on the matter.
The lawsuits will accuse the banks of bundling toxic mortgages -- held by borrowers with inflated or falsified incomes -- as securities and marketing them to investors.
When the borrowers failed to pay their bills, the securities lost value, contributing to the loss of $30 billion by government-backed mortgage firms Fannie Mae and Freddie Mac, losses borne mostly by taxpayers, the Times said.
The two firms, along with two other smaller agencies, currently insure or guarantee 90 percent of all new US home loans.
Instead of trying to force the banks to buy back the tainted bonds, authorities are demanding reimbursement for losses on the securities held by Fannie and Freddie, the Times said.
None of the banks in question responded to requests for comment from the Times, but it said they argued privately that the losses were caused by the general economic downturn and not by any deception related to mortgages.
They also argue that Fannie and Freddie were sophisticated investors who knew that the bonds carried a certain level of risk.
The Times said the suits are being filed now because of a statute of limitations that expires on Wednesday, the three-year anniversary of the government's takeover of Fannie and Freddie.