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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.
A Goldman Sachs sign is seen above their booth on the floor of the New York Stock Exchange. Goldman Sachs was one of the banks the U.S. government is preparing to sue, according to a New York Times report. (photo: Brendan McDermid, REUTERS) 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.
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46 Comments so far
Show AllWell I am a little surprised at this.
This is a smart move by Obama and if you saw the documentary INSIDE JOB, you can imagine all the evidence the FBI would have.
And it took 3 years for President Hope and Change's justice dept. to file this suit because ?
Because it benefits his re election chances and the time limit was runnin out.
Obama is not a Stupid politician.
Not to be cynical but this seems like a shakedown for campaign contributions. These banks will pay a fine and the tax payers will be left with the bil. Expect more gesturing and posturing as 2012 approaches.
Your cynicism is more than justified. Certainly the lawsuits aren't going anywhere, and the banks will stand firm, donate to Romney, and end up paying miserably tiny fines several years from now, well after Oblahblah has been reelected, or Romney (or Perry or whomever) elected. There's really no way the banks will lose this one.
DON't tell me about "My Cynicysm" here, you are purposely misrepresenting my post in order to push your dark vision.
Since when were you, "Jim Glover," the user "pablo30"?
So in addition to being a rather dull Dim shill, you're at least one of the three following:
1. psychotic
2. spamming on multiple accounts
3. unable to follow a thread.
Fess up. Which is it?
Ok Sorry about that, you just seem get in my face so much Your name has become a flag lately.
Like you posted below, I resent cynicism aimed at and replied to me and i am sorry for mistaking you for Pablo on this one.
Lets just be nice... and sorry for the flag on this.
I would like to be impressed by this but I'm still stinging from the major attack on Eric Schneiderman last week. The Obama Administration was the lead perp and was screaming settle, settle, settle. So I'm in the ballpark with pablo30 on this move.
Maybe a different way to look at it is as an attempt (that I cannot see not succeeding) to preempt Schneiderman from effectively prosecuting these same banks and bankers for real damages and penalties.
I thought immediately that it was an attempt to undercut Schneiderman, imagining that once he relented, the suit would be dropped. Does anyone still take SEC cases against Wall Street seriously?
It would be up to us the people to not be so cynical and use the evidence of the case to promote the idea of people owned Banks or Banks closer to the people like the State owned bank in North Dakota.
Does anyone here ever think about looking for the good or a more positive possibility?
Well, for starters, make the Bank of North Dakota a real bank. Right now it's forbidden by law to offer most service to individual citizens. The Bank of North Dakota can sell student loans, but it can't market personal checking accounts, sell CDs, issue auto loans, etc. etc. So while it's better than nothing, it's not a competitor to the megabanks.
This could be the start of a banking reform movement.. these Banks are the Biggest and connected to the Fed.
You got off the topic of the article concentrating on me since I brought up ND Banking here.
This has possibilities but please get out of my face if you don't like what I write and start your own thread with your opinion like a nice person would do.
You own neither this site nor this thread. Deal with it.
You are off topic again.
Just like you lost it here.
Buy yourself a mirror. Making the Bank of North Dakota a real bank is by any stretch of the imagination a concrete solution. If you don't regard it as a positive solution, then that's just your problem, and you're only serving to defend the megabanks.
No you misunderstand what I am saying.
I am not defending big Banks, Only Writing that we should watch the trial if it happens for evidence against the big banks including the Fed.
Maybe I am not your enemy or defender of the Banksters after all... or do ya want to continue to make false accusations to me.
Quite frankly, and as usual, you have little idea what you (or anyone else) is talking about; you've demonstrated that quite thoroughly right here in these comments. So one might charitably assume that you aren't even aware how well you're defending the current banking power structure.
This is your out. Use it wisely.
Why is the US filing a civl suit and not simply arresting these bastards?
q
Filing a civil suit ensures that the matter exists purely for publicity value.
The question was rhetorical.
q
The question may have been rhetorical but I appreciate your answer. I didn't realize it wasn't meant to be answered and am glad it was :P TY corvo.
This "pretend" lawsuit is only intended to get Schneiderman to withdraw his real lawsuit.
"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."
If they refused to respond or comment, then how is what is said privately even known? Is there a journalistic mouse in the house? Or are journalists now "inbedded" in the financial sector, like they are in war zones? We all know how well that works when it comes to truth and accuracy.
"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."
It was the bankster's shenanigans that caused the "general economic downturn." So now they use the depression as an excuse?
There was a day in this country when some fraudulent crook like the banksters would fleece a town and get caught. He usually wound up wearing a hemp necktie and watching the party dangling from the limb of a big tree.
Nowadays, I guess we'd just elect him mayor and give him the keys to the city vault.
This is simply another campaign stunt by Barry the Betrayer. First of all, why did it take this long to bring a lawsuit against these criminals? Secondly, and more important, why is the government not prosecuting these psychopaths on criminal charges?
Like W Bush's Enron fiasco, much hullaboo will be raised about how the administration is going after corporate crooks, but as soon as the next "important" news story about what who won the NFL season opener or what Lindsay Lohan is up to comes out, the corporate media and the easily-distracted-by-nonsense Amerikan buffoons will forget that these gyrations were ever contemplated.
This bullshit makes me retch.
Amen!!! We the people must rise up, but that's a fat chance given the weapons of mass distraction/diversion filling the grocery aisle racks, newspaper sports/entertainment pages. The vampire corporations know whereof their illicit profits emanate--the distracted middle who haven't been educated in civic responsibility. I wrote to Geithner today, but do not expect much in the way of systemic change until people are so desperate that they rise up in some way, preferably LOUDLY and persistently, as they've done in Wisconsin---and not violently, although one can't fault desperate people for rioting, as in London. The movement must be ongoing!
I'm sure president Ofuckya will instruct his sock puppet Eric Holder to settle with the banks for pennys on the dollar with full immunity from any future prosecutions.
That is extremely likely. And as the user pablo30 pointed out, some of those pennies will be landing in Oblahblah's $1 billion campaign chest.
Can the prosecution use water boarding?
Judge...." Just how much justice can you afford Mr Sachs"?..........
Good try......7th graders know the answer to that one.
Smoke and Mirrors. the Justice Dept is filing this lawsuit to make it appear that the government actually gives a rat's ass and is not actually in the pockets of the Plutocracy, which it firmly is. Smoke and mirrors.
The lawsuit will then be settled for pennies on the dollar, and the banks will skate with hardly a slap on the wrist, and no judgment against them. This is the plan, and the Justice Dept. knows a settlement is what will happen - they are actually counting on it - and then they can say "hey, we went after those banks! We got them to pay! Justice is served for the Amereichan people!" When, in fact, all that happened was a backroom deal to appease the fucked-over homeowners during an election year to make it appear the government is not a wholey-owned subsidiary of Wall Street. And the banks will get off scott-free with, only a few piddly million dollars lighter, and no criminal charges hanging around their necks, free to continue screwing us all.
Smoke and mirrors.
The banks will be fined and then will write off the fines so it'll be a wash financially - and that's if they don't find a way to get a refund for their fines so the TBTF will Profit off this.
Worse, the banks will probably pay the pittance fines with interest-free loans from the Fed. Wheeeeeee!
Or interest bearing, where the interest goes right back into the banking cartel's coffers. Remember, the Fed cartel is not a federal entity. The feds in DC and the Fed just coordinate well for major heists.
"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."This is way beyond my ability to comprehend what's going on here, but I have a niggling suspicion that this may be the crux of the matter. My suspicion is that, if they were forced to buy back the garbage, the numbers would be in the trillions, and the banks would all be busted...and maybe the public outrage generated would be so great that the DoJ would not be able not to go after the individuals criminally.
If rendition to third world black sites worked against terrorists (and our government assures us it worked exceedingly well and humanely), then it should work for these bankers, too. I think ten or twenty years of pre-trial detention in a third world dungeon would comply with due process. (Ask the US Supreme Court). Then we would give them a fair trial.
But fantasy aside, I agree with the basic scenario stated by many others that Obama did this purely for the election season and in December 2012, the "justice department" will either drop the charges or settle for puny fines.
Sullivan does not state specifically what violations of which statutes that DOJ enumerates in its suit, what the potential penalties are, or even whether the case is civil or criminal, or both. Whether or not the government is prepared to settle out of court is also unknown, but it usually goes into litigation with some sort of bottom line in mind.
Concerning the delay, it has been quite a while, but just doing the legwork and research to prepare a case as legally complex and possibly groundbreaking as this one probably is, can easily take two years, but I agree with others that politics are almost certainly a factor in timing.
We will all have to wait and see if serious penalties, civil and criminal, sufficent to act as future deterrents, will be forthcoming, or if the favored and powerful interests who wreaked such havoc and got ridiculously rich in the process will receive a token penalty, make a promise - maybe - not to do it again, and get a letter in their file.
Still, this is encouraging. Let's hope it's not just more political theater. If it turns out that the bad actors in this disaster face no serious consequences, then public cynicism and disgust will grow even more if that's possible. Obama and the other professional politicians in Washington know very well that the electorate remains furious with the banksters and the bailouts, and if these lawsuits do not bring some degree of proportionate justice, what little survives of the social contract will be left in shreds.
will the poor banks qualify for public defenders?
Obama's & Holder's step here is largely symbolic--for consumption of the worried Dim voter base. Those lawsuits will be dragged out for decades. This is another example of Obama writing checks with his treacherous fork-tongued mouth that his sorry ass won't be around to cash, just like his grandiose promises of better benefits & pay structure to military personnel.
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This is charade. Are some us still that gullible or what?! A CIVIL suit? Please!
"I can hire one half of the working-class to kill the other half."
- Jay Gould, Gilded Age rail tycoon and land speculator
Hmm, let's see... A $16 to $18 Trillion dollar hole blown through the economy by Wall Street and the Fed; historically unprecedented and fiscally insane wartime tax cuts for millionaires and billionaires--the 2010 extension of which eliminated more government revenue than the budget shortfalls of all 50 States COMBINED, gleefully open-ended war spending coupled to foreign borrowing plus interest and no net new jobs created in August three years after the implosion of the Housing Bubble. Add up the math and you should realize soon if you already haven't that the politically divided remnant middle-class and working-class are being deliberately pressure cooked to explosive volatility.
The remnant middle-class and working-class people who most need to rise and organize are bombarded by two things no other similar population has ever experienced in previous history: (1) A 24/7/365 global "news" (read: corporatist, militarist infotainment propaganda) cycle that Josef Goebbels himself couldn't have dreamed up, and (2) pervasive legal and illegal over-medication including over-reliance on psychological stimulants, 'lite anti-psychotics' and anti-depressives that tend to make their users over time into complacent zombies and affect their hormone balances. American children are the most over-medicated in the world--by their own deteriorated public school system--and many of them grow up believing unquestioningly in "better living through chemistry."
Conditions will soon be so harsh for so many Americans and their friends and loved ones that it will shake them out of their TV/drugged haze to awaken into a Brave New World they haven't even begun to think through. That's when we'll need true leaders the most--especially for the younger generation.
As far as economically desperate dupes carrying out government & corporate crack-downs against poverty-driven civil unrest? Well, we have millions who've cycled through multiple tours in brutal occupation zones, far too many of whom took part in brutality and were psychologically brutalized and "preemptively" numbed to future brutalities they might take part in or experience.
But they don't need to murder people to brutalize them into submission. They can detain them for years sans habeas corpus, psychologically and/or physically torture them, detain or deport their family members, beat the living shit out of them, permanently maim and inflict brain damage on them (sound cannons are perfect for doing this to entire crowds), destroy their reputations, careers, family relationships, etc.
In the old days of the company towns they'd hire armed goons and use sheriffs' deputies to evict entire groups of families onto the street and sometimes send goons to burn them out. They'd have armed goons drive by at night with shotguns and shoot through the windows of the "shotgun shacks" many workers' families lived in.
The assault on collective bargaining starting in Wisconsin earlier this year rolled the relationship between ownership/management and labor back to the 1920s--the days of open, violent class warfare in the streets. The public and enough of "organized" labor just haven't woken up to that fact, yet. But with negligible (and this month, null) net job creation faster than population growth and 300,000 public sector workers a year losing their jobs with no end in sight, the pressures to face that grim reality will rapidly mount. Accelerated offshoring of jobs all this year hasn't helped, and there's no end in sight on that either.
This means, because we are the Divided States of Alzheimers, the sinking middle-class and working-class are going to have to learn the bloody lessons of the labor struggles from the 1870s to the 1930s all over again--only on a larger scale, within a population twice the size it was in 1939, with "free trade" as a barrier to rebuilding domestic manufacturing jobs, high-tech warrantless surveillance, electronic nationwide blacklisting, Next Generation Identification and other techno-fascist hurdles to overcome that didn't exist in the earlier struggles. It's going to get rough and tough and chaotic. Maybe too chaotic for an intelligent revolution. That's my biggest worry.
Oh Pluheeeze. Goldman Sachs is running the White House . Whatever happens you can bet that it won't truly be punitive, no actual charges will be stuck on them, no one will go to jail, and the fine will be less than one day of the take. Anyone want to take odds on that bet?
This lawsuit asks NOTHING for homeowners victimized by foreclosure fraud. It is on behalf of those, not at all poor, bondholders who bought the bad securites based on fraudulent mortages now being foreclosed upon with the cooperation of state and Federal courts and officials.