Bend Over: The Banker’s Fix Is Going In

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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.

About Bill Quick

I am a small-l libertarian. My primary concern is to increase individual liberty as much as possible in the face of statist efforts to restrict it from both the right and the left. If I had to sum up my beliefs as concisely as possible, I would say, "Stay out of my wallet and my bedroom," "your liberty stops at my nose," and "don't tread on me." I will believe that things are taking a turn for the better in America when married gays are able to, and do, maintain large arsenals of automatic weapons, and tax collectors are, and do, not.


Bend Over: The Banker’s Fix Is Going In — 1 Comment

  1. [Payoffs are] too big [for the banks to be allowed] to fail.

    When all of the fraud regarding liars loans and the screwups regarding wet-ink signatures and all the rest was being revealed, I thought that the big banks had really screwed themselves by not following legal requirements for ensuring the audit trail so the property title and encumbrances were clear. The only legal remedy would be to cancel any loans where the chain of liability was not properly documented, and accept the drastic drop in value of every pool with any of these toxic loans.

    But before too long reality – er, cynicism – er, realistic cynicism set in. There was no way this “only legal remedy” would be allowed to stand. The banks and the derivatives holders would buy themselves a law or a ruling that would let them get away with their sloppiness and to hell with the effects on the economy or trust in the legal system. IIRC, the idea was kicked around on DP two or three years ago. And, lo and behold, the cynical viewpoint is the most realistic predictor of political events. Funny how that works, eh?

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