I haven’t commented on this thread mostly because my disappointment in the administration in dealing with the criminal element that lead to the financial crisis is beyond words. Which makes yesterdays news of the FHFA, acting as conservator for Fannie Mae and Freddie Mac, filing 17 suits against major banks and dozens of their subsidiaries, partners and related entities perplexing.
Theoretically, the FHFA is an independent arm of the federal government, under the jurisdiction (I think, maybe someone knows better) of the Treasury Department. Either the FHFA is truly acting indepently of the administration, or the administration acquiesced or even supports the action. I’m not sure which seems more likely, given the apparent opposition of Obama, (the corrupt and incomptetent) Treasury Secretary Tim Geithner, and AG Eric Holder to pursue legal (both civil and criminal) remedies against the big banks. The administration most surely could have stopped it had they wanted.
Anyway, the 17 suits, (I’ve only read one, I suspect they’re almost identical), charge the banks with a variety of securities law violations, as well as fraud, negligence, and conspiracy covering hundreds of specific offerings. They seek damages totalling 100% of the GSE’s losses on these securities. (At least one article puts these losses at $61 billion. I’m not sure of the source of that amount. Possibly the plaintiffs announced this amount, but it seems very low to me.)
Conspicuously absent from the causes of action, are RICO charges, which most certainly could apply. (If the case is proven, then the RICO violations have been proven.) Pure speculation on my part, but this could be the administration’s influence on the suits.
This could spell the end of the state AG’s plan. Or not. It certainly doesn’t have to, since these are all federal charges, with very specific damages, exclusive to the GSE’s. In any case, this is a very positive series of events.
