US Govt to file suit against big banks for mortgage securities fraud

[lektrode]

Re: This Democratic leadership sure has gull.

considering all else thats happened?
this particular conspiracy theory sounds quite plausible

[aaron]

Re: This Democratic leadership sure has gull.

thanks for the spelling correction. It is a tough word for a main-lander, you must admit.
Thanks for not ripping me a new one. People can be sensitive about spellings.

[lektrode]

Re: This Democratic leadership sure has gull.

...Thanks for not ripping me a new one. People can be sensitive about spellings.

no sweat - yes they can, as we have seen here recently...
and thanks for offering a bit of support in my attempts to bring some different viewpoint to the debate
i'm really not as right-wing-redneck republican as some seem to think.
even i think the 'pubs in congress have screwed up the works, in some ways even worse than the dems have.
hell, i even think we need to raise some taxes on some people
but i still think the dems represent and provide cover for the banking interests, just like the 'pubs represent the oil interests
and that the real problem is the political class having no honest incentive to do the right thing for We The People
why the FIREmen/oligarchs have been able to hijack the .gov

[aaron]

Re: This Democratic leadership sure has gull.

I never really thought of dems favoring one flavor of oligarch over the repubs. C. Smith wrote in the past he expects the oligarchs to battle it out against each other now that we have nothing left to give them.

Maybe oil/repubs can beat down finance/dems. And yeah, my impression is the same. Dems drip Wall Street goo from their chins. Republicans have oil all over their faces.

[Slimprofits]

Re: This Democratic leadership sure has gull.

FIRE has grown since the 80s and out of the Northeast.

Part of it is geographical. There are a lot of prominent Dems that have done the revolving door in and out of offices in New York and New Jersey. At the federal level and state governors, etc.

However in 1995 the Republicans won control of the House and kept it accept for 2007-2010.

Money began to flow to them and also President Bush, a two-term President during the final blowout period of the mega bubble (2001-2008). Goldman had their people in the Bush Administration.

If you look at the Congressional Committees, money doesn't discriminate. It pays to pay everyone.

[mmr]

Re: US Govt to file suit against big banks for mortgage securities fraud

Or, to put it another way:

Suing Banks Is Next Best to Letting Them Fail

The Vietnam War gave us the expression, “We had to destroy the village in order to save it.” The same kind of thinking might help explain the U.S. bank rescues of 2008: We had to save the banks in order to sue them.

Last week, the conservator for Fannie Mae and Freddie Mac filed lawsuits against 17 financial institutions to recover losses on faulty mortgage bonds sold to the two government- backed housing financiers. One of the defendants was Ally Financial Inc., the lender formerly known as GMAC that once was the finance arm of General Motors Co.

If the Federal Housing Finance Agency recovers damages from Ally for Freddie Mac, it will be a win for taxpayers. Yet it also will be a loss. That’s because Ally is still majority-owned by the U.S. Treasury.

It’s a ridiculous situation, for sure. Then again the FHFA is doing what it’s supposed to do: preserve and conserve the assets of Fannie and Freddie. It’s not the agency’s fault that Congress passed the Troubled Asset Relief Program and gave the Treasury Department new powers to keep Ally and its ilk alive.

Congress could have let those companies die, as they deserved to. It didn’t, though. So now the inevitable claims are working their way through the courts. The government’s roles as both a referee and a player in the financial markets remain as conflated as ever....

In contrast to the latest suits, the FHFA went even further last year when it allowed Freddie to sue the Internal Revenue Service over a $3 billion tax claim. A trial date in that suit is set for December in U.S. Tax Court. In essence, one arm of the Treasury is directly suing another arm. However the case turns out, it will be a wash for the Treasury, which has injected about $65 billion into Freddie to keep it afloat.

That boneheaded lawsuit is distinguishable from the cases filed last week, where the FHFA says Freddie and Fannie got ripped off by private-sector actors that committed securities- law violations. The agency accused several firms of fraud, including Morgan Stanley, JPMorgan, and Goldman Sachs Group Inc.

So why haven’t other federal agencies such as the Securities and Exchange Commission filed complaints against the same banks for allegedly defrauding Fannie and Freddie? And where’s the justice for the Fannie and Freddie executives who, with their regulator’s approval, kept saying their companies were healthy even while they were dying?

The government has so many conflicting agendas, we may never get satisfactory answers to those questions. All of this is part of the legacy of the unprecedented federal interventions in 2008, as well as a reminder of what a colossal mistake it was in the first place to create Fannie and Freddie with all their privatized profits and socialized losses.

The proper role of government in a free-enterprise system is to police market participants at arm’s length, not join their ranks and choose winners and losers. That’s a line we crossed a long time ago, though. The great outrage isn’t that a federal agency is suing some of these too-big-to-fail banks for damages. It’s that we ever bailed them out at all.