196 BILLION DOLLARS
Why is no one on here talking about this. I know its hard to understand numbers once they get so big, but the 196 billion that these 17 banks are getting sued for is a tremendous amount of money (~2% of the US deficit not owned by the Fed).
If you want to start a discussion than you might want to edit your post to actually have a bit of detail on what you are stating. And giving your opinion or stance might help to facilitate a discussion.
He's talking abou the banks being sued over the mortgage backed securities.
http://www.bloomberg.com/news/2011-09-03/jpmorgan-bofa-among-17-banks-s…
Damn BAML on the hook for $60B of that holy shit...
It's like the government is trying to kill BAML with all this crap. I wouldn't be amazed if they spun off ML as a "good bank" in the future. As ML is the only part of BAML that is currently making money.
There had to have been some serious miscommunication in the executive branch cause there is no way geithner would have allowed this lawsuit to go through if he had any say...
Am I the only one who thinks this is really, really bad?
It's honestly stupid. Fannie Mae and Freddie Mac obviously did not have people intelligent enough to manage the risk associated with the securities. They saw AAA and invested. The government should not backstop failure of corporations.
Agreed of course. You should not buy a bag of poop because the seller tells you "this is not a bag of poop". When you are a player as big as FNMA there is no excuse. However, contractually (and I am in no way, shape, or form a lawyer, but from what I know at least) it seems that the originators are liable.
No whoever reps the securities is liable.
For example, let's say that company A buys a portfolio of bullshit mortgages from company B. Company B has to rep the mortgages when they sell to A, but let's say they lie about credit scores or something yadda yadda yadda company A securitizes the mortgages and sells the securities. If company A's officers rep the securitized products on their own, they are liable for the fraud. The investors sue A who can in turn sue B, but the investors can't sue B. Understand?
"bring down reps" are pretty common though, where the originator reps the mortgages on sale to the securitizer, and the securitizer and originator both rep the securitized products.
I'm not a lawyer either, but I play one on TV.
Agreed of course. You should not buy a bag of poop because the seller tells you "this is not a bag of poop". When you are a player as big as FNMA there is no excuse. However, contractually (and I am in no way, shape, or form a lawyer, but from what I know at least) it seems that the originators are liable.
Isn't the originator the orignal source all the way upstream, the first source of the "rep"
Yeah, but whoever the security blows up on has to bring charges against the person that repped to them, and it has to work it's way back upstream like that, understand?
For example: originator A sells mortgages to underwriter B, which they rep. Bank B securitzes the mortgages, reps the securities and sells them on to pool of investors C. Securitized products blow up because the originator (A) lied about the credit risk of the mortgages.
Investors C bring charges against underwriter B. Underwriter B and the individual agents of underwriter B who signed their names to the transaction are civilly and criminally liable. B can turn around and sue A, but this doesn't eliminate B's liability, and I think the agents of B pretty much get hung out to dry. I'm not a lawyer though, but this is pretty much how I understand it.
It's like if you are stopped too close to another car at a stop light, and third car hits you from behind knocking your car into the first car. first car sues you, and you sue the 3rd car for the damages you owe to the first car.
That's a flawed comparison. It's more like Car A hit Car B because the driver had the seat warmer on, but ti was too hot and he went to turn it off. While the seat warmer was as hot as what was outlined in the specs, the driver did not take the time to see that, and is suing the company who made the car because he didn't realize how hot that temp would be.
While I see where you're coming from and don't necessarily think you're wrong, you're trying to assign guilt and I was just explaining how the process works.
Our examples aren't really comparable.
They're likely to end up with a settlement far less, without admitting guilt. This is actually good news for the banks.
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