FHFA has filed suit against 17 of the worlds leading banks. Many of these banks, Bank of America, French SocGen, and a few others, are already terribly close to zero liquidity. Bank of America, for instance, has had to sell a considerable stake in it’s Chinese Builders Bank holdings. Though BOA says they don’t need the money. Then there’s Countrywide. Who owns Countrywide again?
From the FHFA press release:
As conservator of Fannie Mae and Freddie Mac, FHFA is charged with preserving and conserving these companies’ assets and does so on behalf of taxpayers. The complaints filed today reflect FHFA’s conclusion that some portion of the losses that Fannie Mae and Freddie Mac incurred on private-label mortgage-backed securities (PLS) are attributable to misrepresentations and other improper actions by the firms and individuals named in these filings. Based on our review, FHFA alleges that the loans had different and more risky characteristics than the descriptions contained in the marketing and sales materials provided to the Enterprises for those securities.
While America enjoys a long holiday weekend, watch for Europe to implode, followed by BOA/Countrywide on Tuesday.
Here’s the full list of the banks named in the suits:
1. Ally Financial Inc. f/k/a GMAC, LLC
2. Bank of America Corporation
3. Barclays Bank PLC
4. Citigroup, Inc.
5. Countrywide Financial Corporation
6. Credit Suisse Holdings (USA), Inc.
7. Deutsche Bank AG
8. First Horizon National Corporation
9. General Electric Company
10. Goldman Sachs & Co.
11. HSBC North America Holdings, Inc.
12. JPMorgan Chase & Co.
13. Merrill Lynch & Co. / First Franklin Financial Corp.
14. Morgan Stanley
15. Nomura Holding America Inc.
16. The Royal Bank of Scotland Group PLC
17. Société Générale
One thing I notice about the list is that many of these are allys of the current administration, especially GE. Will Obama allow these suits to continue?