Follow-up, another major lawsuit by Feds against banks
Following up on the October 16th post here, "Pre-election lawsuits, the Feds have struck again. This time they are seeking at least $1 billion from BofA for actions by Countrywide Financial. The Feds filed suit in New York federal court saying that BofA defrauded mortgage agencies by passing on loans without proper controls. The behavior started when Countrywide was an independent company and was ended by BofA as they integrated the companies in 2009.
This litigation related to mortgages is never ending. Once again, agencies with implicit federal guarantees and under the oversight of a congressional committee, that is Fannie and Freddie, seem to have no responsibility for what it accepted to securitize, even though they are on the surface supposed to be mortgage experts. With a host of congressional leaders and cabinet members dictating to those agencies that underwriting a wide swath of the market was part of their mission to spread home ownership, they seemed to have done nothing to check what they were underwriting.
In this case, it is clear that Countrywide was bad. Always had been, was in the day when all seemed copacetic. BofA was not necessarily complicit in this at all. They made an unwise acquisition for sure and ended this practice as it was uncovered. Given that the acquisition was not "encouraged" by the government like some discussed on 10/16, BofA is seemingly responsible for what it bought, but where is the responsibility on the government's part for how they "managed", or should that be "did not manage" their agencies.
Everyone keeps coming after the big banks, the Justice Department, other federal oversight agencies, state attorney generals' from all over, and the crass tort bar with their numerous civil suits. It's never ending, everyone at the trough of the capital these big banks have raised at the behest of the Fed and global capital rules. When does the government take responsibility for its lack of oversight, for the lack of almost any effort to monitor portfolios at their agencies where huge salaries were being paid. The various CEO's at Fannie Mae made as much money as any big bank CEO with the exception of a few who were at the pure investment banks that existed before the Great Recession.
How low will the government go in reaching back to bygone days to dig up more lawsuits? Why was there no tort reform in Dodd/Frank or the Affordable Health Care Act(answer - those trial lawyers are the leading contributors to Democrats). How low will states go to raise more money to backstop their faltering budgets? How long can big banks take this water torture without having to report falling capital levels and declining stock prices? They are needed for the recovery to happen. Is there any reason to wonder why banks are so cautious these days? Is there any reason not to wonder whether these suits are just political hijinks just prior to the election?
This litigation related to mortgages is never ending. Once again, agencies with implicit federal guarantees and under the oversight of a congressional committee, that is Fannie and Freddie, seem to have no responsibility for what it accepted to securitize, even though they are on the surface supposed to be mortgage experts. With a host of congressional leaders and cabinet members dictating to those agencies that underwriting a wide swath of the market was part of their mission to spread home ownership, they seemed to have done nothing to check what they were underwriting.
In this case, it is clear that Countrywide was bad. Always had been, was in the day when all seemed copacetic. BofA was not necessarily complicit in this at all. They made an unwise acquisition for sure and ended this practice as it was uncovered. Given that the acquisition was not "encouraged" by the government like some discussed on 10/16, BofA is seemingly responsible for what it bought, but where is the responsibility on the government's part for how they "managed", or should that be "did not manage" their agencies.
Everyone keeps coming after the big banks, the Justice Department, other federal oversight agencies, state attorney generals' from all over, and the crass tort bar with their numerous civil suits. It's never ending, everyone at the trough of the capital these big banks have raised at the behest of the Fed and global capital rules. When does the government take responsibility for its lack of oversight, for the lack of almost any effort to monitor portfolios at their agencies where huge salaries were being paid. The various CEO's at Fannie Mae made as much money as any big bank CEO with the exception of a few who were at the pure investment banks that existed before the Great Recession.
How low will the government go in reaching back to bygone days to dig up more lawsuits? Why was there no tort reform in Dodd/Frank or the Affordable Health Care Act(answer - those trial lawyers are the leading contributors to Democrats). How low will states go to raise more money to backstop their faltering budgets? How long can big banks take this water torture without having to report falling capital levels and declining stock prices? They are needed for the recovery to happen. Is there any reason to wonder why banks are so cautious these days? Is there any reason not to wonder whether these suits are just political hijinks just prior to the election?
posted by John Borden at 9:19 PM
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