Breaking News − Feds Pile On − Another Significant Major New Law Suit Against Too Big To Fail Banksters

by Ken Kappel on September 6, 2011

The news coming in over the last ten days is very very heartening for underwater homeowners. It’s as though Rip Van Winkle woke up and somehow was given the facts in his sleep. He’s now very angry at the Systemic Fraud by the Financial Elites, and is doing something about. Rip − like the Federal Govt. is really the Big Player in the game − sets the tones for public awareness. We’re not Rip, but, we like him, and moreover, respect him a lot. He’s not pals with the Too Big to Fail Banks.

We’re far being “even in like” (let alone “love”) with CNBC and its marionette-like Talking Heads of disinformation. Yet, the fact that the following article is coming from one of the Fraudsters main Above Ground Bastions of disinformation, is frankly extremely significant. The wake up call is coming. Of course this “stuff,” even played out on the national stage may blow over. On the other hand − more likely − will not blow over.

The Point is that issues and legal Causes of Action raised in these new lawsuits point out and document Systemic Fraud − Predatory Lending − Illegal Fraud-based Mortgages, which individual families who are underwater can use in their litigations with their lenders.

Second Point is that judges all over the nation are getting it too. Here we go.

The article over at CNBC.com is titled: “US Sues 17 Major Banks Over Risky Mortgages.” You can click on the live link above, or read it directly below. To the article.

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A U.S. regulator sued a number of major banks Friday over losses on more than $41 billion in subprime mortgage bonds, which may hamper a broader government mortgage settlement with banks.” [Emphasis Added.]

“The lawsuits by the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, came as a surprise to the market and weighed on bank shares. The lawsuits could add billions of dollars to the banks’ potential costs at perhaps the worst possible time for the industry.” [Emphasis Added.]

Ken here. But, but, but, they don’t have the money − went off to bonuses. Oh, the Fed will give them more from us taxpayers. Sure, they’ll give more for a little more time, but, the Fed has lost its grip − working these past years to save Financial Elites.

“The FHFA accused major banks, including Bank of America , its Merrill Lynch unit, Barclays, Citigroup and Nomura Holdings of selling bonds backed by mortgages that should have never been packaged into securities.”

“The other banks are: Ally Financial (formerly GMAC), Countrywide Financial, Credit Suisse, Deutsche Bank, First Horizon National, General Electric, Goldman Sachs, HSBC North America, JPMorgan Chase, Morgan Stanley, The Royal Bank of Scotland Group and Société Générale.”

“The biggest banks are already negotiating with the attorneys general of all 50 states to address mortgage abuses. They are looking for a comprehensive settlement that will protect them from future litigation and limit their potential mortgage litigation losses.”

Ken here. If you’ve been reading this blog, you know about this already. CNBC reports, “… protect them from future litigation.” Our ass. Generally litigation refers to civil suits, not criminal indictments. Why didn’t CNBC say so. Well who do you think they get there ad revenues from:  Give up?  Financial Elites who control our economy and politicians.

“This new litigation could disrupt the AG settlement,” said Anthony Sanders, finance professor at George Mason University and a former mortgage bond strategist.”

“Banks may be more reluctant to agree to a settlement if they know litigation from other government players could still wallop their capital, he said.”

“Before the FHFA lawsuits had even hit a court docket, financial experts offered blunt expectations for the outcome.”

“The lawsuits will be settled. The end result will be a further outflow of cash from the banks, and more importantly an additional black eye,” said Sean Egan, managing director of Egan-Jones Ratings.”

“FHFA director Edward DeMarco is looking to minimize future losses for Fannie Mae and Freddie Mac, which are owned by the government after failing in 2008. The firms are pillars of U.S. mortgage finance.”

“The KBW Bank Index closed down 4.5 percent, nearly doubling the losses of the broader market. Bank of America led the index lower, dropping 8.3 percent.”

“Bank shares also came under pressure from signs that the Federal Reserve could start selling shorter-term debt on its books and buying long-dated bonds to push longer-term yields lower as a stimulus measure.”

“Such a move, known as “operation twist,” would hurt banks whose profit margin is tied to the short-term rates at which they fund and the longer-term rates at which they invest.”

“Major banks already face potential payouts of tens of billions of dollars to settle regulatory charges of abusive mortgage lending and foreclosure practices, and other investor lawsuits over mortgage debt losses. Such payouts would reduce earnings and weaken capital levels, perhaps harming the ability of banks to lend money and provide much-needed life to a stalled housing market and weakened economy.”

“Representatives of the sued banks declined to comment or were not immediately available to comment.”

“Banks have been walloped by mortgage losses, but so have Fannie Mae and Freddie Mac, which failed after trying to finance too many bad mortgages with too little equity. The two entities guarantee bonds backed by mortgages. The question of whether to take action for problems related to the mortgage bonds has been under discussion since Fannie Mae and Freddie Mac were placed in conservatorship in 2008, a person familiar with the matter said.”

“While the ultimate amount FHFA will seek is still unclear, that person said it could top the $20 billion being discussed by the banks and the state attorneys general.”

“Defendants falsely represented that the underlying mortgage loans complied with certain underwriting standards and guidelines, including representations that significantly overstated the ability of the borrowers to repay their mortgage loans. These representations were material to the GSEs, as reasonable investors, and their falsity violates (the law) and constitutes negligent misrepresentation, common law fraud, and aiding and abetting fraud,” the FHFA said in the suit against Merrill Lynch.”

“The blizzard of litigation against banks is hurting share prices in the sector because investors feel unable to estimate the ultimate scope of a given bank’s legal liabilities.”

“Bank of America, for example, had intended its proposed $8.5 billion settlement in June with investors in Countrywide mortgage securities to resolve most litigation tied to its disastrous 2008 takeover of that home loan provider.”

“But many parties are objecting to that settlement, and the deal didn’t stop the insurer American International Group from suing Bank of America for $10 billion over its own alleged mortgage securities losses.”

“Nor did it stop Nevada’s attorney general from threatening to withdraw from an $8.4 billion nationwide settlement with the bank. The AG now wants to sue the bank, accusing it of reneging on promises to modify mortgages.”

Ken here. She did it, she filed the suit, see our report called:
Arguably Led by New York AG Eric Schneiderman − Nevada Joins In.

“Other banks also face mortgage lawsuits. In May, for example, the U.S. Justice Department sued Deutsche Bank , accusing it of misleading a U.S. housing agency into believing loans it made qualified for federal insurance.”

“The FHFA’s lawsuits follow an initial lawsuit in July against UBS seeking to recover $900 million of losses incurred on $4.5 billion of debt.”

“One legislator praised the expected FHFA lawsuits. Brad Miller, a Democratic congressman from North Carolina, said, “Not pursuing those claims would be an indirect subsidy for an industry that has gotten too many subsidies already.”

“FHFA and various investors have alleged that banks, while packaging residential home loans into securities sold to investors, failed to conduct adequate due diligence, and hid or misstated the quality of the underlying loans and underwriting as well as borrowers’ ability to make payments.”

“As more borrowers fell behind or went into foreclosure, the value of securities backed by their loans fell, causing losses for investors.”

“Losses stemming from the precipitous deterioration in subprime and other mortgages pushed the government to take over Fannie Mae and Freddie Mac on Sept. 7, 2008. Since then, taxpayers have spent more than $140 billion to keep the firms afloat.”

Ken here. We’ll let it go at that, though it sounds like “Older Brother Forced − Teen Spirit” to us. Remember, if you’re underwater, follow this blog closely. We try to bring the critical information you will need to defend your family and your home.

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