It is perhaps not a surprise to anyone at this point that during the real estate boom mortgage backed securities were misrepresented as safer than they were and valued too highly as a result.
Flickr photo by LifeSupercharger
But the government is finally planning to make someone pay for the deceit, according to an article on CNN.com:
“The Federal Housing Finance Agency, which oversees Freddie Mac and Fannie Mae, is getting ready to sue Goldman Sachs (GS, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Bank of America (BAC, Fortune 500) and Deutsche Bank (DB) among others, according to the reports.”
The banks being sued all declined to comment when CNN contacted them. As for what this says about the future of the mortgage mess, the article also said;
“The suits, which are expected to be filed in the coming days, stem from subpoenas the finance agency issued to banks a year ago,” wrote Deutsche Bank analysts Jim Reid and Colin Tan, in a note to investors. “It seems that there is little end in sight for the sector as far as negative news is concerned.”
Mortgage backed securities are essentially packages of mortgages that are sold in secondary markets.
Feel free to comment below on this (or any other post here). Do you think specific people should be prosecuted or sued, rather than just the banking corporations?
