Too Big To Fail Will Be Re-Tested - The Lawsuits Are Coming!
Too Big To Fail Will Be Re-Tested - The Lawsuits Are Coming!
While the banks are earning record profits and paying out new rounds of bonuses, the housing crisis is far from over. Investors are filing lawsuits against U.S. Banks to repurchase billions of dollars in mortgage backed securities. These investors contend that the banks made material misrepresentations in regards to the underlying mortgages when the banks sold these investments.
The housing crisis is a systemic disaster that has infiltrated our entire economy. The crisis is now being fought on multiple fronts:
There are the investors who purchased the mortgage backed securities starting to file lawsuits against U.S. Banks seeking repurchase of the securities at their original value plus damages.
There is Fannie Mae & Freddie Mac the total cost of the taxpayer bailout may be $400Billion. Fannie Mae & Freddie Mac are looking to push back Billions in bad mortgages back to the banks.
There are the foreclosed homeowners who may have been improperly evicted from their homes, looking for any legal opening to sue.
There are the State AG's in all 50 States investigating the foreclosure practices of the banks. They will be looking to the banks to pay fines for their indiscretions.
The banks currently hold millions of homes in their foreclosure inventory.
An estimated 10 million more homes will be foreclosed upon in the next few years
Strategic Defaults are on the rise homeowners walk away from negative equity
Current calculation show that 70% of Nevada homeowners are underwater, 50% in Arizona and Florida and in California 35% of homeowners are underwater.
The housing crisis is going to end up costing Trillions of dollars when all is said and done. So who is going to pay the bill? If the banks are forced to pay for these losses, the banks will effectively be bankrupted or fail. How will this work in the days of too big to fail. The leading 6 banks now control 60% of GDP. What will the effect be on our economy if one, two or even all six of these banks are bankrupted?
If the banks are not bankrupted by these losses then the U.S. Taxpayer will get stuck paying the bill in its entirety. With our economy in terrible shape, no job growth, very small economic growth, the looming social issues of health care, social security and Medicare, do we bankrupt the U.S. Taxpayer to save the banks?
The question of too big to fail must be readdressed, because the housing crisis is just starting to heat up and the losses will be staggering.
Tag Words: Foreclosure, robo-signers, Fannie-mae, Freddie-mac, bankruptcy, mortgages, mortgage-backed-securities, Under-water, Negative-Equity, Economy, U.S. Banks, Walk-away
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