Did the Other Shoe Just Drop? by Ellen Brown

[Crewleader]

Did the Other Shoe Just Drop?

by Ellen Brown

July 16, 2014

For years, homeowners have been battling Wall Street in an attempt to recover some portion of their massive losses from the housing Ponzi scheme. But progress has been slow, as they have been outgunned and out-spent by the banking titans.

In June, however, the banks may have met their match, as some equally powerful titans strode onto the stage. Investors led by BlackRock, the world’s largest asset manager, and PIMCO, the world’s largest bond-fund manager, have sued some of the world’s largest banks for breach of fiduciary duty as trustees of their investment funds. The investors are seeking damages for losses surpassing $250 billion. That is the equivalent of one million homeowners with $250,000 in damages suing at one time.

The defendants are the so-called trust banks that oversee payments and enforce terms on more than $2 trillion in residential mortgage securities. They include units of Deutsche Bank AG, U.S. Bank, Wells Fargo, Citigroup, HSBC Holdings PLC, and Bank of New York Mellon Corp. Six nearly identical complaints charge the trust banks with breach of their duty to force lenders and sponsors of the mortgage-backed securities to repurchase defective loans.

Why the investors are only now suing is complicated, but it involves a recent court decision on the statute of limitations. Why the trust banks failed to sue the lenders evidently involves the cozy relationship between lenders and trustees. The trustees also securitized loans in pools where they were not trustees. If they had started filing suit demanding repurchases, they might wind up suedon other deals in retaliation. Better to ignore the repurchase provisions of the pooling and servicing agreements and let the investors take the losses—better, at least, until they sued.

Beyond the legal issues are the implications for the solvency of the banking system itself. Can even the largest banks withstand a $250 billion iceberg? The sum is more than 40 times the $6 billion “London Whale” that shook JPMorganChase to its foundations.

Who Will Pay – the Banks or the Depositors?

http://www.counterpunch.org/2014/07/16/did-the-other-shoe-just-drop/

[Demeter]

1. I wouldn't hold my breath

nor would I expect a mere foreclosed-upon former householder to benefit from these suits.

Still, it is amusing to see the TBTF backing and filling, apologizing, grovelling even.

[dixiegrrrrl]

3. Everybody is gong after the banks now, I am happy to see.

Pennsylvania just won suits at the county level for banks not paying recording fees everytime they changed ownership of a mortgage.
THAT alone can run into the millions, just for one state.

Payback, and fun to watch.

[msongs]

2. if this $ doesnt go to robbed home owners this all just more corporate scum shenanigans nt

[magical thyme]

4. just the 1%ers going after their own

makes for good theatre for the rest of us, but won't trickle down much or any to the real victims.

And note that the victims are more than just the foreclosed upon. Those trapped under water are victims of the scam as well.

And people who bought outright for cash instead of "investing" in a 401K, and need to sell to downsize for retirement and now have nobody to sell to are victims as well.

[Crewleader]

5. well said magical thyme