Finally, Citigroup has joined a growing list of big banks to settle with the government for misrepresenting the quality of mortgages it sold to Fannie Mae. Citi is paying $968 million to settle claims on 3.7 million home loans. Let’s see, that’s about $260 for each loan. That sounds pretty cheap to me. Basically, we’re talking about mortgaged-backed securities that Citi said it sold as top quality but instead had high default rates. They could have been forced to buy them back because they were not as good as they said they were. These loans were commonly called “toxic.” Many of the loans in the securities contained what are called “liar loans.” Why do the taxpayers have to absorb this junk while another Too-Big-Too-Fail Bank gets a slap on the wrist? Why are there not fraud charges brought? Why isn’t Citi forced to buy this junk back? Oh, that’s right, that’s what Too-Big-Too-Fail means. You think Citi would survive if it had to take back 3.7 million loans? If each loan was just $100,000, that would mean Citi would have to take back $370 billion in “toxic” debt. Don’t you love how the mainstream media soft pedals this kind of massive rip-off to the taxpayer?
I don’t love it, but I expect it. And it would have been no different under a Republican administration.
The fix, you see, is in. And always has been.