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(Wikimedia Commons)

This looks very promising:
The federal agency that oversees the mortgage giants Fannie Mae and Freddie Mac is set to file suits against more than a dozen big banks, accusing them of misrepresenting the quality of mortgage securities they assembled and sold at the height of the housing bubble, and seeking billions of dollars in compensation.

Among those expected to be sued by the Federal Housing Finance Agency are Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank.

The suits will argue the banks, which assembled the mortgages and marketed them as securities to investors, failed to perform the due diligence required under securities law and missed evidence that borrowers’ incomes were inflated or falsified. When many borrowers were unable to pay their mortgages, the securities backed by the mortgages quickly lost value.

A beautifully concise summary. The banks of course blame the larger economic downturn rather than their own complicity in causing the larger economic downturn.

Investors fear that if banks are forced to pay out billions of dollars for mortgages that later defaulted, it could sap earnings for years and contribute to further losses across the financial services industry, which has only recently regained its footing.

Sure. Holding banks accountable for their crimes could hurt their bottom lines. And sending thieves to prison could hurt their abilities to steal more.

The suits are being filed now because regulators are concerned that it will be much harder to make claims after a three-year statue of limitations expires on Wednesday, the third anniversary of the federal takeover of Fannie Mae and Freddie Mac.

Good move. Good timing.

Originally posted to Laurence Lewis on Thu Sep 01, 2011 at 07:33 PM PDT.

Also republished by Good News, ClassWarfare Newsletter: WallStreet VS Working Class Global Occupy movement, and Daily Kos.

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