(Image source: The Consumerist/Flickr)
BY WEN YAN
ANCHOR CHRISTINA HARTMAN
You're watching multisource business video news analysis from Newsy.
The "too big to fall" banks -- might have discovered a whole new batch of trouble. The federal overseer of Fannie Mae and Freddie Mac is set to file lawsuits against dozens of major banks for their role in allegedly misrepresenting the quality of their mortgage securities. Euronews has more.
“...the Federal Housing Finance Agency claims the banks failed to perform due diligence and missed evidence that borrowers’ incomes were falsified or inflated. The banks had pooled the mortgages and sold them as securities.”
The lawsuits are aimed at Bank of America, JPMorgan Chase, and Goldman Sachs among others. But MSNBC’s Joe Scarborough suggests -- isn’t this a little ironic?
JOE SCARBOROUGH, MSNBC: “Listen to this, this has been such a scam for the past three years that everybody has had a target on their backs except for Fannie and Freddie who have been mismanaged and corrupted. You know what, they should investigate Fannie and Freddie."
The New York Times broke the story and says -- it’s more reason for investors to be wary of the banking system.
"This federal effort is a new chapter in a huge legal fight that has alarmed investors in bank shares."
Although the announcement of the lawsuits has been met with some positive responses, a Bloomberg host says -- he’s confused.
"It's interesting to see the government on one hand is trying to rebuild the bank trying to sort of push them to loan more money, and on the other hand is aggressively going after them for aggressive lending. It’s totally, you know, feeding them with one hand and taking them away with the other."
More than confusion, one research director tells Fox News about her concerns the lawsuits could damage the financial markets.
"The U.S. banking sector has already suffered a massive loss of confidence and remains incredibly fragile."..."The lawsuit and massive sums involved may aggravate the problem and cause another leg lower in the financial sector."
Transcript by Newsy.
