New Developments: Fed Sues Big US Banks over Risky mortgages. Did you hear about it?
New Developments: Fed Sues Big US Banks over Risky mortgages. Did you hear about it?
According to the Associated Press the Federal Government submitted a number of lawsuits. Quietly under the radar the Government sued 17 financial firms which included many of the largest US Banks. The Lawsuits were filed this past Friday before the long Labor Day weekend, by the Federal Housing Finance Agency which oversees Fannie Mae and Freddie Mac.
The 17 institutions affected by this lawsuit are in alphabetic order: Ally Financial Inc (formerly known as GMAC), Bank of America, Barclays Bank, Citigroup Inc, Countrywide Financial Corp, Credit Suisse Holdings Inc., Deutsche Bank AG, First Horizon National Corp., General Electric Co., Goldman Sachs & Co. and its financial unit First Franklin Financial Corp., Morgan Stanley, Nomura Holding America Inc., The Royal Bank of Scotland Group and Societe Generale.
The government did not provide how much money they are asking in damages or what the dollar amount of the lawsuit consists of.
Just for informational purposes the Fannie and Freddie securities that are affected by this are in the neighborhood of about $200 billion.
Now I am wondering out loud, what will be accomplished? Will this help anyone outside of Law Firms defending these institutions? Will this be just a bunch of headlines?
I am concerned that the repercussions will be that Lenders will tighten up Loans even more than they are doing NOW and potentially derail the fragile Real Estate market. Last time I was worried about the Fed’s Activities I thought they would tank the California & US Real Estate Market. It turned out they tanked the World’s Economy.I hope I am wrong. So please comment and let me know where I am going wrong with my thinking.
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