Tuesday, June 2, 2015

US demands Wall St. pay for 2008 blow-up: Link

To fix Fannie Mae and Freddie Mac, the worst and costliest victims of all those bad home loans sold in the 2000s

US demands Wall St. pay for 2008 blow-up: Link

Update: Here's the US housing regulator's lawsuit against the big banks. 

Local interest: The government is NOT suing Wells Fargo, PNC or other banks with lots of Philly-area branches. It IS suing Ally Financial (GMAC), which is partly based in Horsham. It's suing, big-time, Bank of America, whose consumer loan operations employ thousands in Wilmington.


The U.S. government's impending lawsuit against alleged villains of the 2008 financial collapse - big banks like Goldman Sachs and JPMorgan that sold billions in bad home loans they pretended were good home loans - on first thought seems late, and maybe dangerous.

Where was the government in the mid-2000s, when these reckless loans were being written, packaged and sold? And what good does it do to hold the banks responsible now, when many of their bosses have left, bankers have repaid their government bailouts (with interest), and business confidence remains shaky and vulnerable to blockbuster federal lawsuits and other shocks?

Makes more sense when you consider the plaintiff - the Federal Housing Finance Agency - has had to oversee the worst, costliest, and major still-unresolved part of the 2008-09 bailouts - at Fannie Mae and Freddie Mac, which lost billions, not because they guaranteed a lot of bad loans, but because, to finance good loans, they invested heavily in highly-rated mortgage-backed bonds that turned out to be secretly rotten with weak credits.

Late is better than never; but this could and should have been prevented. Financiers, traders, lenders and borrowers were greedy; government failed to protect them from each other. So now, to court.

About this blog

PhillyDeals posts drafts, transcripts and updates of Joseph N. DiStefano's columns and stories about Philly-area business, which he's been writing since 1989.

DiStefano studied economics, history and a little engineering at Penn and taught writing at St. Joseph's. He has written thousands of columns and articles for the Inquirer, Bloomberg and other media, wrote the book Comcasted, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com, distefano251@gmail.com, 215.854.5194 or 302.652.2004.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano