US Government To Sue Big Banks Over Mortgage Crisis

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We support reforms to the financial marketplace that protect consumers from unscrupulous banks and lenders.

By Consumers Union on Friday, September 2nd, 2011

The US government is about to file a suit against the big banks for their role in the sub-prime fiasco. After the federal government propped up the big banks with our tax dollars so they could stay in business, the banks haven’t returned the favor by helping out the public in the way they should. They aren’t helping homeowners in sufficient numbers to avoid foreclosure through loan modifications which affects the value of other houses and the economy in general. Not to mention that the subprime collapse triggered a bigger economic meltdown that wiped out retirement accounts and stalled the economy.

The banks have had many opportunities to do the right thing yet they have not. By filing a lawsuit for these failures, the government is sending a strong message: Banks need to be held accountable for their actions.

From the NY Times:

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.

The Federal Housing Finance Agency suits, which are expected to be filed in the coming days in federal court, are aimed at Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, among others, according to three individuals briefed on the matter… The impending litigation underscores how almost exactly three years after the collapse of Lehman Brothers and the beginning of a financial crisis caused in large part by subprime lending, the legal fallout is mounting.

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