FX.co ★ U.S. Government Takes 17 Large Banks to Court

According to Associated Press, the Federal Housing Finance Agency (FHFA) filed lawsuits on Friday against 17 big banks charging them in breaking the law on securities soared and the resulting damages of $196 billion.
FHFA which manages Fannie Mae and Freddie Mac, major U.S. mortgage companies, claims that the banks have misrepresented the value of mortgage securities they sold to these companies. As a result of the mortgage crisis, the securities rapidly lost value leading Fannie Mae and Freddie Mac to the brink of bankruptcy. The U.S. government spent more than $140 billion to bail out these companies alone, which together with two other were handling some 90% of U.S. mortgage market.
The list of banks sued by FHFA includes Ally Financial (former GMAC), Bank of America, Barclays Bank, Citigroup, Countrywide Financial, Credit Suisse, Deutsche Bank, First Horizon, General Electric, Goldman Sachs, HSBC, JPMorgan Chase, Merrill Lynch and its unit First Franklin Financial, Morgan Stanley, Nomura, The Royal Bank of Scotland and Société Générale SA.
According to Agence France-Presse, shortly before the crisis, Fannie and Freddie bought $32.6 billion from Bank of America, $14.1 billion worth of mortgage securities from Credit Suisse, $14.2 billion from Deutsche Bank and $11.1 billion from Goldman Sachs.
The suit does not contain an amount of compensation for the U.S. government. The government wants to invalidate purchases of the mortgage securities and recover profits lost on credit and interest payments as well as legal costs.
The 2008 mortgage crisis in the U.S. led to the financial and economic crisis which affected most countries in the world.