Tuesday, March 17, 2015

The Probe: #fanniegate

The Probe

Many financial institutions resorted to inappropriate, misleading, aggressive and fraudulent methods to boost their mortgage operations during the pre-crisis period that fueled the sub-prime mortgage crisis. Consequently, Freddie Mac and Fannie Mae reached the brink of bankruptcy and the government intervened to rescue these lenders.

In order to avoid such dire situations in the future, the regulators started implementing stringent restrictions. Consequently in 2011, the Federal Housing Finance Agency (‘FHFA’) sued 18 financial organizations, including Wall Street biggies like The Goldman Sachs Group, Inc. and Bank of America Corp. BAC for selling faulty mortgage-backed securities to Freddie Mac and Fannie Mae that caused investors severe losses.

http://finance.yahoo.com/news/nomura-royal-bank-scotland-fha-200308418.html

One more time:
Many financial institutions resorted to inappropriate, misleading, aggressive and fraudulent methods to boost their mortgage operations during the pre-crisis period that fueled the sub-prime mortgage crisis.

Consequently, Freddie Mac and Fannie Mae reached the brink of bankruptcy and the government intervened to rescue these lenders.

That sums it up. BANKS should be wound down or Fannie mae and Freddie Mac?
The answer is in the PROBE!

The FHFA has accused the Japan-based Nomura, sponsor of the above mentioned securities, and Royal Bank of Scotland, the underwriter, of providing it with misleading details about securities worth $2 billion. Moreover, the regulator has alleged the underwriter of misconduct in the underwriting process, which artificially inflated the average value of securities by 11.1%.

If proven guilty, the banks will have to take over the distressed securities worth $480 million (valued a week ago), besides incurring the $1 billion fine.

FRAUD for $2 billion will cost them $1.48 billion, worst case, if Nomura loses in court. 
Not $2 billion! Why is that? Same reason the TBTF banks got off with 10 cents on the dollar for their FRAUD against Fannie mae and Freddie mac! Over $200 billion in Fraud was committed by the TBTF banks and the VICTIM'S were Fannie and Freddie (GSE'S)

#Fanniegate FannieGate



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