Blaming The Big Banks For The Housing Crash

Politicians want to blame the big banks and Wall Street for our recession and housing crash. They want to bleed the banks and make the big moneymen pay up to government and then distribute these payoffs to the politically connected.

How Fannie Mae and Freddie Mac can claim to have been snookered by subprime-backed MBS (mortgage-backed securities) is hard to swallow. The FHA will likely settle with the big banks for a few hundred million, far short of the $30 billion the government lost on these MBS.

Wall Street were played for suckers by those who sold them packaged MBS, but the packagers had no way of knowing how worthless these bonds were because there was no historical data on the subprime market. Only on prime mortgages.

The Los Angeles Times reports:

The suits represent one of the most forceful government legal actions against the banking industry nearly four years after the start of a severe recession and financial crisis brought on in part by the crash of the housing market.

The FHFA had been negotiating separately with the banks to recover losses from mortgage-backed securities purchased by Fannie and Freddie, but decided to get more aggressive.

“Over the last couple of years, they’ve been doing sort of hand-to-hand combat with each of the banks,” said Michael Bar, a University of Michigan law professor who was assistant Treasury secretary for financial institutions in 2009-10. “The suits are an attempt to consolidate those fights over individual loans.”

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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