#FannieGate FHFA Fannie Mae Freddie Mac
A Tokyo-based bank knowingly sold Fannie Mae and Freddie Mac garbage mortgage-backed securities, a judge ruled Monday in the first courtroom test of charges that financial giants recklessly helped trigger the financial crisis.
Manhattan Federal Court Judge Denise Cote wrote that Nomura Holdings and Royal Bank of Scotland Group deliberately deceived buyers of billions in toxic mortgages.
“This case is complex from almost any angle, but at its core there is a single simple question,” Cote wrote.
“Did defendants accurately describe the home mortgages in the offering documents for the securities they sold that were backed by those mortgages?”
The judge said they did not — big time.
“The magnitude of falsity, conservatively measured, is enormous,” she wrote in a 361-page decision.
The Federal Housing Finance Agency, which brought the suit, had introduced emails among Nomura executives during a three-week trial that indicated they knew the mortgages were bad.
One email included the line “This one is crap,” referring to mortgages underwriting a bond.
Another warned: “Danger Batman!!”
The banks had argued the losses were caused by the housing crash and not by fraud.
The Nomura case was the first to reach trial out of 18 lawsuit filed by FHFA in 2011 over $200 billion in mortgage-backed securities that various banks sold Fannie Mae and Freddie Mac.
The government agency became the conservator of Fannie and Freddie amid the mortgage meltdown of 2008, and has already scored nearly $17.9 billion in settlements with some of the other banks, including Bank of America and JPMorgan Chase.
Cote did not declare a specific amount of damages Nomura and RBS will owe, but her ruling hints the U.S. regulator will recover around $450 million.
RBS underwrote some of the securities at issue in the trial.
The overvaluation of mortgage-backed securities played a critical role in the economic crisis of 2008. As the values of homes began to drop, financial institutions with stakes in the securities suffered massive losses.
The amount of money lost during the crisis is still being debated, but is thought to be as much as $25 trillion.
A lawyer for Nomura did not respond to a request for comment.
18 lawsuits for $200 billion, netting $20 billion. 10cents on the dollar, for $200 billion in Fraud!
WHO SUFFERED THE LOSSES? FANNIE MAE AND FREDDIE MAC!
WHO NEEDED A BAILOUT FOR THE LOSSES? FANNIE MAE AND FREDDIE MAC AND TBTF BANKS.
It really is this simple! $200 billion in Fraud proves, $187 billion in LOANS to Fannie and Freddie was only needed because of the CRIMES of the TO BIG TO FAIL BANKS!
- PVCT shareholder blog
- GILD shareholders blog
- FANNIE FREDDIE GOOGLE GROUP
- Bill Maloni GSE
- FNMA - YAHOO message board
- FNMA Real Time QUOTE
- $60 per share, target
- Throwing out the case: Perry Injunction
- Why the FHFA took over Fannie and Freddie and AIG
- homesteading off grid planning
- Save on Your Electric Bill