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Feds sue banks over bad securities - FSU Voice - Fayetteville State University
In a bold move on Sept. 2, the Federal Housing Finance agency filed lawsuits against 17 banks for their alleged practice of fraudulently selling close to $200 billion in securities linked to subprime mortgages.
Several of the banks are major American financial institutions, who some economists say were nearly single-handedly responsible 2008's recession. Bank of America, Merrill Lynch & Co., JPMorgan Chase & Co., and Goldman Sachs & Co., were among the banks listed in the FHFA's legal filings report.
A subprime mortgage is "a type of loan granted to individuals [or couples] with poor credit histories (often below 600), who, as a result of their deficient credit ratings, would not be able to qualify for conventional mortgages," according to Investopedia.com. These mortgages often have higher interest rates than traditional loans of the same type. And most commonly, they're adjustable rate mortgages, in which many individuals with poor credit do not understand.
Investopedia continues, "Many lenders were more liberal in granting these loans from 2004 to 2006 as a result of lower interest rates and high capital liquidity. Lenders sought additional profits through these higher risk loans, and they charged interest rates above prime in order to compensate for the additional risk they assumed. Consequently, once the rate of subprime mortgage foreclosures skyrocketed, many lenders experienced extreme financial difficulties, and even bankruptcy."
The 17 banks are being accused of participating in this unethical lending practice.
Un ethical?
Or illegal?
and GS does not loan money, there a Hedge fund, not a commercial bank
That has nothing to do with the problem and what the Dems did when they finally got power
Real estate values remain high
None of these events take place