Too big to fail...too big to sue?
September 1, 2011 7:47 PM Subscribe
TARP is winding down...bring on the lawsuits.
posted by darkstar (56 comments total)
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Within the next week, the US government is set to sue a dozen banks for billions in losses caused by those banks' misrepresenting the risks of mortgage-backed securities. This is in addition to numerous State Attorneys General suing the banks for failing to reach an agreement in foreclosure abuses. Insurance giant AIG will also be suing BofA
to recoup losses over the mortgage bonds. BofA had also agreed to a settlement of $8.5 billion
to cover losses from soured mortgage debt issued through Countrywide. Deutsche Bank is suing WaMu
. Goldman Sachs already settled with the SEC for $500 million
for their fraud and have been sued by others
seeking to recover losses.
The settlements of these suits may run into the tens of billions of dollars and have a major impact on banking sector profitability for years to come. Privately, bank officials "also counter that further legal attacks on them will only delay the recovery in the housing market, which remains moribund, hurting the broader economy."