U.S. Suing Banks over Mortgaged-Backed Securities

October 27, 2011 by · Leave a Comment
Filed under: General 

investments by the rating agencies and sold by some of the country’s largest banks, the U.S. government is intending to sue. The Federal Housing Finance Agency (FHFA) that oversees Fannie Mae and Freddie Mac, is hoping to be compensated for billions in losses.

The claim is that the banks misrepresented the quality of the securities. The FHFA issued 64 subpoenas last year to see the underlying documents for the mortgage-backed securities in which Fannie and Freddie had invested. The purpose given for the subpoena was to ascertain whether banks and other financial entities were liable for losses suffered by Fannie and Freddie, losses covered for by the U.S. Treasury.

Maybe we can also ask the buyers and managers of Fannie and Freddie what due diligence they did at time of purchase.

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