YAWN! The government keeps filing lawsuits that COULD be big and COULD cause make corrections in the marketplace to reflect reality. But then they go nowhere, with discovery stymied by the Banks and then a settlement on the table that sells out everyone except the half dozen big banks that we allow to control the market, courtesy of our taxpayer money and our refusal to apply the same rules to them we do to the 7,000 other community banks and credit unions who could do the same or better job at handling the country’s finance sector.
Don’t get fooled. When someone comes out and says that securitization was an illusion, a ruse to defraud as many people in world population as possible, TEN we will have addressed the problem. When that special someone is willing to consider the idea that the banks never actually lost money and never needed a bailout, but that the top management diverted pornographic profits to off-shore havens then we will be on track to recapture the nation’s wealth, which currently is held hostage by Wall Street banks and the great majority of those in government who depend upon the mega banks for their political campaign expenses.
In the meanwhile, the lawsuits should be watched because deep inside each suit are some additional allegations, indicating the results of administrative investigations that you can use. When we get serious, the lawsuits will come fast and furious and aggressively pursued. Until then, all thee actions amount to little more than window dressing.
Unfortunately, I agree with Mr. Garfield. He’s probably right. Until or unless someone is willing to raid these banks and the homes of their CEOs and Board Members, and criminally charge them with fraud (among other things), nothing is going to change. Just sit back and wait for the ‘settlement’ that will be praised as ‘saving the taxpayers’ money’ or ‘helping with the recovery.’
You can read the Federal Home Loan Agency’s Press Release here (PDF).
With regards to support for individual lawsuits (perhaps by homeowners or individual investors), a number of the individual complaints by FHLA contain the following allegations:
- Misrepresented LTV Ratios – Understatement of loan-to-value 100% or greater and overstatement of loan-to-value 80% or less.
- Inflated Appraisals – Banks colluded with appraisers to artificially increase values of homes; i.e. Home was worth $100k; seller and lender wanted and got an appraisal of $200k; loan was given at $200k = the borrower was immediately underwater $100k. Yet the banks continue to blame the borrowers and refuse to give principal reductions.
- Breaches in Underwriting Standards – Giving loans to people they knew couldn’t pay, many times altering the original application, but selling these same loans to investors as ‘money good’.
While this may be a start of something bigger, it still isn’t a criminal action to…….