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Massive Wave Of Lawsuits To Be Filed By The US Against America's Biggest Banks As Soon As Tomorrow

Tyler Durden's picture


In a move that could either send BAC stock limit down overnight or send it soaring (we are still trying to figure out just what is going on here), the NYT has broken major news that the US is preparing to go nuclear on more than a dozen big banks among which Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, in an attempt for Fannie and Freddie to recoup $30 billion if not much more. The lawsuit is expected to hit the docket in the next few days: "The suits stem from subpoenas the finance agency issued to banks a year ago. If the case is not filed Friday, they said, it will come Tuesday, shortly before a deadline expires for the housing agency to file claims." Now, taken at face value, this would mean that Bank of America can kiss its ass goodbye as unlike the Walnut Place litigation, this will take place in Federal Court where Article 77 is not applicable. Yet there is something that gives us pause: namely logic, captured by the following words: "While I believe that F.H.F.A. is acting responsibly in its role as conservator, I am afraid that we risk pushing these guys off of a cliff and we’re going to have to bail out the banks again,” said Tim Rood, who worked at Fannie Mae until 2006 and is now a partner at the Collingwood Group, which advises banks and servicers on housing-related issues." In other words: if the banks are sued, and if justice prevails, the end of the world is nigh and cue TARP 2 - XXX. Now where have we heard that argument over, and over, and over before.

From the NYT:

The suits will argue the banks, which assembled the mortgages and marketed them as securities to investors, failed to perform the due diligence required under securities law and missed evidence that borrowers’ incomes were inflated or falsified. When many borrowers were unable to pay their mortgages, the securities backed by the mortgages quickly lost value.


Fannie and Freddie lost more than $30 billion, in part as a result of the deals, losses that were borne mostly by taxpayers.


In July, the agency filed suit against UBS, another major mortgage securitizer, seeking to recover at least $900 million, and the individuals with knowledge of the case said the new litigation would be similar in scope.


Private holders of mortgage securities are already trying to force the big banks to buy back tens of billions in soured mortgage-backed bonds, but this federal effort is a new chapter in a huge legal fight that has alarmed investors in bank shares. In this case, rather than demanding that the banks buy back the original loans, the finance agency is seeking reimbursement for losses on the securities held by Fannie and Freddie.

The prestory is by now known by everyone:

Besides the angry investors, 50 state attorneys general are in the final stages of negotiating a settlement to address abuses by the largest mortgage servicers, including Bank of America, JPMorgan and Citigroup. The attorneys general, as well as federal officials, are pressing the banks to pay at least $20 billion in that case, with much of the money earmarked to reduce mortgages of homeowners facing foreclosure.


And last month, the insurance giant American International Group filed a $10 billion suit against Bank of America, accusing the bank and its Countrywide Financial and Merrill Lynch units of misrepresenting the quality of mortgages that backed the securities A.I.G. bought.


Bank of America, Goldman Sachs and JPMorgan all declined to comment. Frank Kelly, a spokesman for Deutsche Bank, said, “We can’t comment on a suit that we haven’t seen and hasn’t been filed yet.”

The response? Why Paulson-esque Mutual Assured Destruction:

But privately, financial service industry executives argue that the losses on the mortgage-backed securities were caused by a broader downturn in the economy and the housing market, not by how the mortgages were originated or packaged into securities. In addition, they contend that investors like A.I.G. as well as Fannie and Freddie were sophisticated and knew the securities were not without risk.


Investors fear that if banks are forced to pay out billions of dollars for mortgages that later defaulted, it could sap earnings for years and contribute to further losses across the financial services industry, which has only recently regained its footing.

The total litigation amount will not be in the trillions... but will certainly be in the tens if not hundreds of billions.

While the banks put together tens of billions of dollars in mortgage securities backed by risky loans, the Federal Housing Finance Agency is not seeking the total amount in compensation because some of the mortgages are still good and the investments still carry some value. In the UBS suit, the agency said it owned $4.5 billion worth of mortgages, with losses totaling $900 million. Negotiations between the agency and UBS have yielded little progress.

Bottom line: the gloves are coming off, and while we want to believe that this is the final nail in BAC's coffin (Quinn Emanuel is counsel for the FHFA), we do have a nagging feeling that the US will not purposefully do everything in its power to destroy its banking sector.


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Thu, 09/01/2011 - 23:10 | 1624963 Gotterdammerung
Gotterdammerung's picture

Emptor,… I think you may have hit one out of the park with that adept interpertation!! Most insightful grasshopper!!

"Jay,… show our lucky contestant the amazing prize he's won tonight"

Thu, 09/01/2011 - 23:57 | 1625109 Caviar Emptor
Caviar Emptor's picture

Thnx! We'll soon see if they're thinking what my devious mind is thinking. But seriously, I think they will realize they're out of cards to play. And the stakes are huge

Thu, 09/01/2011 - 23:15 | 1624980 darkpool2
darkpool2's picture

Back door nationalization--- real or de facto was what first came to my mind as well. " you WILL start lending and.......creating jobs. Obama is a desperate man at this point and naive to assume he won't be unorthodox. Look at his background and "training" End justifies the means type stuff....

Thu, 09/01/2011 - 23:08 | 1624943 GoinFawr
GoinFawr's picture

Heh, I'm no fan of any Republocrat or Demoblican, but what a tough crowd. It complains if they don't do anything, and when it looks like they might do something, before the gift horse even leaves the gate its complaining that it doesn't have any teeth.

Don't get me wrong, you're almost certainly right; there are some incredibly solid arguments, both deductive and inductive, backing your conclusions up. I just find the reaction is so reflexive and predictable that I can't help but chuckle a bit.

Thu, 09/01/2011 - 23:31 | 1625031 lizzy36
lizzy36's picture

Oddly past behavior is predictive of future behavior and results :)

My conclusion is based on both parties having exactly the same puppet masters.

Fri, 09/02/2011 - 01:12 | 1625248 GoinFawr
GoinFawr's picture

Like I said, there`s nothing so odd about that.

Fri, 09/02/2011 - 08:52 | 1625786 spanish inquisition
spanish inquisition's picture

My theory is similar. How do you end all this bank stuff? Get em in a big room, charge everyone with everything. Then from you..I also expect that after the election the whole thing will be settled for a small fine, slap on the wrist and no wrong doing admitted.

I think some wrong doing will be admitted to eliminate additional lawsuits and it will consolidate every possible plaintiff.  

This is the big clear the books, as close to a presidental pardon as you can get. (Now that corporations are people, I wonder if they have looked into pardoning Wall Street?).

The only thing that will gum up the deal is the plaintiffs giving alot of campaign contributions to congress because they want a better deal.

Thu, 09/01/2011 - 22:45 | 1624821 RobotTrader
RobotTrader's picture



Futures are getting hammered.

Bonds are flying.

Now is the time to raise the debt ceiling again to allow Uncle Gorilla to roll over his maturing zero interest T-Bills and lock in 3% 30-yr. fixed rate.

Heh, Uncle Gorilla is a "serial refinancer"....


Thu, 09/01/2011 - 22:51 | 1624854 j0nx
j0nx's picture

I see DOW down 7.00 points at the moment and SP down 2.3 points. Hammered where?

Thu, 09/01/2011 - 23:05 | 1624935 snowball777
snowball777's picture

I see DJIA -51 and S&P -7...still not "hammered", but nice just the same.

Thu, 09/01/2011 - 23:33 | 1625045 Cdad
Cdad's picture

Aussie market is down 1% straight out of the gate.  

Thu, 09/01/2011 - 23:49 | 1625083 Id fight Gandhi
Id fight Gandhi's picture

If futures at this time are anything but up then they are hammered.

Thu, 09/01/2011 - 23:20 | 1624994 HyperLazy
HyperLazy's picture

Majority of asian markets down aproximately 1%...

Thu, 09/01/2011 - 22:49 | 1624828 kito
kito's picture

its not that hard to see through. the perfect populist pill to pop.  this is clearly a campaign move. sue them for 30 billion, settle after elections for 30 million. or--

maybe its qe3!!!!!

Thu, 09/01/2011 - 23:12 | 1624972 unununium
unununium's picture

By the time the fed meeting rolls around, we'll be begging on both knees for QE3.  Just as they have planned it.

Thu, 09/01/2011 - 23:51 | 1625090 Cdad
Cdad's picture

Who's we?  Are you of the criminal syndicate banking cartel there, Unun?

Thu, 09/01/2011 - 22:47 | 1624830 monopoly
monopoly's picture

Well, if we would have done this 2+ years ago, we would be climbing out of the septic tank by now. Looks like we are going to start all over again. Just keep throwing darts till one hits. While it would be a short term negative, lets break up these behemoths, divide the assets to small solvent local banks and credit unions and get rid of these festering pus wounds.

Will they still get their bonus. I mean, is not what it is all about with these turds.

Thu, 09/01/2011 - 22:48 | 1624835 HedgeAccordingly
HedgeAccordingly's picture


Thu, 09/01/2011 - 22:49 | 1624841 Lucius Corneliu...
Lucius Cornelius Sulla's picture

I am afraid that we risk pushing these guys off of a cliff and we’re going to have to bail out the banks again,” 

The next round will not be TARP it will be nationalizing the banking system.  Senior management heads will be rolling.  Time for some hardball.

Thu, 09/01/2011 - 22:55 | 1624871 Caviar Emptor
Caviar Emptor's picture

See my comment below. In America we pretend not to nationalize. That would be too embarrassing. 

Thu, 09/01/2011 - 23:01 | 1624911 PaperBugsBurn
PaperBugsBurn's picture

nationalize? when the banks run the gov is it really nationalization or just good ole fascism?

Thu, 09/01/2011 - 23:59 | 1625118 Caviar Emptor
Caviar Emptor's picture

Depends on who's the one stuck cleaning the toilets

Fri, 09/02/2011 - 00:13 | 1625145 DeadFred
DeadFred's picture

The image you just put into my head, Obama with a toilet brush in hand smiling that smile he has whenever Tyler announces he's giving yet anather speach. <smile>

Thu, 09/01/2011 - 22:49 | 1624843 Long-John-Silver
Long-John-Silver's picture

So it's come down to cannibalization among the government and banking elites. May their epic journey turn out like that of the Donner Party.

Thu, 09/01/2011 - 23:04 | 1624932 AGORACOM
AGORACOM's picture

LJS, dead on nails.  Will be fun to watch.  In the meantime, Republican candidates can expect HUGE $$ rolling into them for the next 14 months.


Thu, 09/01/2011 - 22:50 | 1624849 AGORACOM
AGORACOM's picture

From Day 1, I have repeatedly stated that Obama's biggest tactical failure was not going after the banks.  It would have simply been the right thing to do while cementing himself as a true President of the people.  Alas, all those political contributions were too strong for even Mr. Change to resist ... and it cost him the house.

Now, with the exit sign on the White House getting brighter, he has no choice but to go after the big bad bankers in a last ditch effort to re-establish himself as a slayer of the elite and retain his Presidency.

Good tactic, shitty motivation and it will probably work because I'm glad the bankers are finally about to get their asses handed to them.


George ... The Greek ... From Canada

Thu, 09/01/2011 - 22:54 | 1624864 j0nx
j0nx's picture

Amen brother. I would be content living in a box under the 14th street bridge if I knew that Dimon and Blankfein were taking it in the shitter in prison from a 6'4" black man named Rastus sporting a 9" python.

Thu, 09/01/2011 - 23:01 | 1624910 kito
kito's picture

because the govt is filing a lawsuit in the name of populist vote getting doesnt mean (unfortunately) the banks are getting their asses handed to them. nothing of substance will result from this except obamas re-election. this is a scripted joke of an event which will end with a slap on the wrist. with all the perks that the banks have been getting-- tarp, automatic profits via the fed, etc, watered down legislation, this is the least the banks can do for obama and co.

Thu, 09/01/2011 - 23:18 | 1624990 Spastica Rex
Spastica Rex's picture

Obama won't be re-elected with anything close to the current level of unemployment. Bagmen are a dime a dozen.

Thu, 09/01/2011 - 23:23 | 1625010 kito
kito's picture

still waiting for those postal layoffs spas??? havent forgotten our bet.....

Thu, 09/01/2011 - 23:51 | 1625094 Spastica Rex
Spastica Rex's picture

Me neither. Wait and see.

Fri, 09/02/2011 - 00:59 | 1625223 snowball777
snowball777's picture

You think the unemployed are more likely to vote for someone who wants to continue UI payments or someone who wants them cut off?

Good luck with that "No Bread, Circuses Suck" platform.

Fri, 09/02/2011 - 11:03 | 1626541 Spastica Rex
Spastica Rex's picture

I hear you, but I think you overestimate the desire of the jobless to stay jobless. This is a shining moment for a demagogue to save America.

Thu, 09/01/2011 - 23:19 | 1624993 AGORACOM
AGORACOM's picture

Kito, you then need to short banks into 10/12, then go long for one hell of a double ender.

Personally though, I think Obama will get his pound of flesh ... and part of that will involve seeing big names step down to the applause of the masses.  Anything less and he doens't get re-elected.


Thu, 09/01/2011 - 23:29 | 1625021 kito
kito's picture

what big names? dimon? blankfein?? come on now agoracom..the big movie stars never have their characters die at the end of the film....

Thu, 09/01/2011 - 23:37 | 1625051 lizzy36
lizzy36's picture


Billions in fraud will be settled for millions in fines and no admission of guilt.

Follow the money. The puppet masters have raised hundreds of millions for Obama.

Fri, 09/02/2011 - 00:56 | 1625210 gmj
gmj's picture

Or, CEO heads roll, and banks get a slap on the wrist.  Big PR payback with minimum risk.

Oh, and new CEO gets a massively reduced compensation package.  Sweet revenge for the sheeple.

Fri, 09/02/2011 - 10:27 | 1626365 TheFourthStooge-ing
TheFourthStooge-ing's picture

Personally though, I think Obama will get his pound of flesh ... and part of that will involve seeing big names step down to the applause of the masses.

I don't want to see the big names step down. I want to see them step the scaffold.


Thu, 09/01/2011 - 23:02 | 1624914 WallStreetClass...'s picture

I knew the whole "obama" story was a meme when he hired Geithner, who at the time had unpaid taxes. the whole rig stinks to high heavens

Thu, 09/01/2011 - 23:22 | 1625004 Lucius Corneliu...
Lucius Cornelius Sulla's picture

Not to mention the reappointment of the Chairsatan.

Thu, 09/01/2011 - 22:53 | 1624853 Caviar Emptor
Caviar Emptor's picture

Here's what I think: 

The big banks need to be cleared out of the way in order to set the stage for huge mortgage writedowns (read loan forgiveness) to take place directly between mortgagors and Fannie/Freddie/FHA without intermediation. The gov is going to take possession of the notes of the big zombie banks by putting them into default and making their continued operation impossible. It's a way of pretending not to be nationalizing these banks as would happen in other countries, but we have to pretend we're capitalist

Thu, 09/01/2011 - 22:56 | 1624881 Nate H
Nate H's picture

Exactly. We are going route of stealth nationalization - (unless currency reform first)

Thu, 09/01/2011 - 23:00 | 1624904 Caviar Emptor
Caviar Emptor's picture

That's right. The alternative this time, so soon after the debt ceiling spectacle, is Armageddon

Thu, 09/01/2011 - 23:10 | 1624966 kito
kito's picture

weve already had stealth nationalization of banks!! where have you been the last 3 years!!! why would the govt ruin a good thing by making it obvious now!!!

Thu, 09/01/2011 - 22:57 | 1624886 j0nx
j0nx's picture

Oh when are the quaint little people going to understand that there has never been and never will be debt jubilee for the little man. Think again CE.

Thu, 09/01/2011 - 23:02 | 1624918 Caviar Emptor
Caviar Emptor's picture

Never said jubilee. And the little man is only the second consideration. We're talking the credit of Uncle Sam. Without this stealth bank nationalization the alternative is Armageddon, because a huge costly bailout of private banks so soon aafter the debt ceiling debacle would crash bonds and the dollar. We're no longer the only ones calling the shots 

Thu, 09/01/2011 - 23:00 | 1624901 Seasmoke
Seasmoke's picture

most likely, as i cant think of a better way for Obama to get himself relected

Thu, 09/01/2011 - 23:41 | 1625065 Lucius Corneliu...
Lucius Cornelius Sulla's picture

Okay, it won't be called "nationalizing" it will be called "FDIC Conservatorship".  Take out the common shareholders and the unsecured creditors and there will be plenty of capital left for FNM and FRE.

Thu, 09/01/2011 - 22:55 | 1624873 dvp
dvp's picture

Without denying the skeptics preceding my post, a somewhat different interpretation.  In part, Obama's polling is declining because his own "base" is leaving him.  If doubting this, just read the posts on this site.  Bringing this suit may well be a sop thrown to his base, which is perfectly consistent with the skeptics preceding my post.  Additionally, this law suit puts the tea partiers in a difficult position.  On one hand, they scream for a balanced budget, and making the banks pay certainly contributes to "balancing the budget."  On the other hand, they protectively wrap themselves around the wealthy.  Just imagine the position in which this puts FOX News.  Those who caused the Great Recession should be preserved from paying anything for it while your (the viewers) entitlements should be cut to reduce the deficit.  A tough play which the administration can watch with pleasure.  It's all theatre.

Thu, 09/01/2011 - 23:08 | 1624955 KevinH
KevinH's picture

This is the explanation that makes some logical sense, but I can't imagine another banking crisis during an election year is going to help Obama's cause.

Thu, 09/01/2011 - 23:30 | 1625025 azusgm
azusgm's picture

Obama is a puppet. TPTB are throwing out their puppets all across the MENA region. Obama will be replaced with a new and improved puppet. Maybe Hillary.

Fri, 09/02/2011 - 00:40 | 1625191 FeralSerf
FeralSerf's picture

I thought he was pretty good at reading the teleprompter.

Thu, 09/01/2011 - 23:27 | 1625018 Lucius Corneliu...
Lucius Cornelius Sulla's picture

If Obama took down Dimon, Mozilo and Blankfien, complete with hard time, then fired Geithner and the Chairsatan even I would consider voting for him.  And that is saying a lot!

Fri, 09/02/2011 - 00:44 | 1625197 LongBallsShortBrains
LongBallsShortBrains's picture

"  If Obama took down Dimon, Mozilo and Blankfien,....."


Now THAT is some HOPE!

Thu, 09/01/2011 - 23:48 | 1625081 topcallingtroll
topcallingtroll's picture


The tea party got started by bailout revulsion.

The tea party has no love for big banks.

"Protecting the wealthy" gives you away as a democrat.

The tea party wants to protect everyone from high taxes. Not just the wealthy. No one has claim to my income, neither poor nor wealthy. Dont try pathetic class warfare talking points here.

Thu, 09/01/2011 - 23:59 | 1625116 ClassicalLib17
ClassicalLib17's picture

You have, obviously, never been to a local teaparty or 9/12 patriot meeting.  You also have no idea what is about to happen to YOUR movement.  Keep on watching MSNBC.

Thu, 09/01/2011 - 22:55 | 1624875 iLoveMisesToPieces
iLoveMisesToPieces's picture

lol, whut?

Thu, 09/01/2011 - 22:55 | 1624877 pods
pods's picture

So the banks that were bailed out are now going to be sued to recoup some of that money, creating the need to be bailed out again?


Fri, 09/02/2011 - 00:45 | 1625198 LongBallsShortBrains
LongBallsShortBrains's picture

velocity of money?

Fri, 09/02/2011 - 01:01 | 1625226 snowball777
snowball777's picture

viscosity of liquidity?

Thu, 09/01/2011 - 22:56 | 1624880 prophet
prophet's picture

Resolution Authority.

Thu, 09/01/2011 - 22:58 | 1624888 Seasmoke
Seasmoke's picture

better get your money out of the banks on could be a very long weekend

Thu, 09/01/2011 - 23:29 | 1625023 Lucius Corneliu...
Lucius Cornelius Sulla's picture

Anybody who keeps their money, other than what they need to pay their bills, in a bank is a fool.

Thu, 09/01/2011 - 22:58 | 1624889 Sutton
Sutton's picture

Why does no one comment on Clinton's pig Roberta Achtenberg's role in the mortgage fiasco?

Thu, 09/01/2011 - 22:58 | 1624890 AGORACOM
AGORACOM's picture

ATTN TIM ROOD: If the banks get pushed off a cliff, they'll be salvaged for pennies on the dollar by those of us who were fiscally responsible enough to take advantage.  Stupid people (corporations are now people) deserve to must implode ... smart people then deserve to benefit from any resulting fire sale.

Simple as that.


Thu, 09/01/2011 - 23:04 | 1624925 WallStreetClass...'s picture

bank of america branches out here in Florida are out of cash. you have to schedule cash outs. IT HAS ALREADY STARTED!

Thu, 09/01/2011 - 22:58 | 1624891 tony bonn
tony bonn's picture

sue the bankster assholes into utter oblivion.....let justice prevail.....the banking industry will rise from the ashes....fuck these damned crooks....

Thu, 09/01/2011 - 23:00 | 1624905 Not A Pundit
Not A Pundit's picture

And maybe this was known by the buyer of November $4 PUTS to the tune of $1 million about a week or two ago.


Got Cash???  Bank Holiday Bitchez!

Thu, 09/01/2011 - 23:00 | 1624906 I am Jobe
I am Jobe's picture

Another dog and pony show. After hearing and more hearings and reports everything will be ok. Govt and the banks give each other blow jobs and the consumers get shafted.

Thu, 09/01/2011 - 23:00 | 1624907 thadoctrizin
thadoctrizin's picture

.gov bails out the banks then creates an environment wher the banks can't lose only to sue said banks (just in time for an election cycle) to take back accumulated profits. And the people cheer! Quite the chess move Obama

Thu, 09/01/2011 - 23:01 | 1624913 iLoveMisesToPieces
iLoveMisesToPieces's picture

And so begins act #1 of throw the banksters under the bus theater.

Thu, 09/01/2011 - 23:02 | 1624915 Rastadamus
Rastadamus's picture

Election coming!

Thu, 09/01/2011 - 23:02 | 1624917 zorba THE GREEK
zorba THE GREEK's picture

If this is an attempt by the administration to somehow give the appearance that the government is going to recoup ill-gotten gains

from insolvent banks in the interest of the people, they have completely lost touch with reality. Any citizen of this country with at

least two healthy braincells can see through this farce. If Obama thinks that he can distance himself from the evil bankers by this

stunt, he has been ill-advised, and that would be no surprise to the masses as it is more than apparent that he has been getting bad

advice since he took office.

Thu, 09/01/2011 - 23:15 | 1624979 AGORACOM
AGORACOM's picture

Zorba, you give the American masses too much credit.  They're all watching Jersey Shore and the Bachelor.  All O needs to do is show 'em a couple of perp walks in between episodes and he's locked in.

Also, there's only room for one guy on this blog with "... The Greek" in his name :-)

George ... The Greek ... From Canada

Fri, 09/02/2011 - 01:54 | 1625288 GoinFawr
GoinFawr's picture

Strombo' is that you?

Thu, 09/01/2011 - 23:03 | 1624923 prophet
prophet's picture

Give everybody a job.

Refi everbody at historically low rates, no matter the LTV or their income.

Screw the banksters.

Pound the crap out of some dry and dusties.

Crank the stock market.

get re-elected



Thu, 09/01/2011 - 23:04 | 1624926 navy62802
navy62802's picture

News is already hitting the brainwaves. Dow futures down 32 on a negative trend.

Thu, 09/01/2011 - 23:04 | 1624928 my puppy for prez
my puppy for prez's picture

On a more political note, I see this as the administration trying to distance itself from the FED and the banksters....sort of like riding the white horse in to help the poor little F/F....who will most likely be used to "bring back jobs and the economy"!

Thu, 09/01/2011 - 23:07 | 1624949 I am Jobe
I am Jobe's picture

Can't wait ot hear the brilliant plans the Teleprompter in Chief. Can we have the PPT in advance please to scriblle or make paper rockets.

Thu, 09/01/2011 - 23:07 | 1624948 snowball777
snowball777's picture

Anyone know if losing these cases would be considered a credit derivative trigger event for the TBTF?

Thu, 09/01/2011 - 23:54 | 1625068 tickhound
tickhound's picture



And just to be on the very safe side of bizarro world...

Anyone know if in a week this gets FAS back over $20 and Jaime Dimon in the running for Treasury Secretary?

I swear if that happens I'll f'ing...

drink some more and listen the blokes overseas call us puzzies on zh.

Fri, 09/02/2011 - 01:02 | 1625229 snowball777
snowball777's picture


Fri, 09/02/2011 - 01:38 | 1625273 tickhound
tickhound's picture


Thu, 09/01/2011 - 23:07 | 1624950 Ecoman11
Ecoman11's picture

It's the lawsuit bubble!!! Woohoo

Thu, 09/01/2011 - 23:08 | 1624952 Caviar Emptor
Caviar Emptor's picture

Before any of you think that this is a move to "score political points" or tip the election, think again. It's the start of an utter desperation move. We've spent a summer witnessing what's happening with insolvent banking systems in Euroland. It is quite literally checkmate. Either banks get nationalized (or stealth nationalized) or the entire interconnected system goes down in flames, including US and Euro and UK and Swiss big banks. THis is a move to ringfence the problem before the fire spreads and takes down the entire economic and political system, leaving China as the shining light

Thu, 09/01/2011 - 23:21 | 1624997 Cdad
Cdad's picture


As we all prepare to see just how bad the employment picture really is, and as President Zero hastily prepares yet another speech about how he is going to create a few jobs by spending a trillion dollars, and as the Euro banks go down [taking with it the Euro currency], and gold goes nuts and the sheeple leave the markets in droves...what we have here are people finally doing things because they HAVE to do something.

This is not just a series of nothing events, politicians fighting over the camera.  This is something bigger.  And while I don't know about China being a shining anything, I [and all of you] have known for months that the situation in this country is utterly fucked.

I can feel it.  I can feel our government and financial system's concern for its totally destroyed cred.  Too late, of course...but is nice to see them tremble.

Thu, 09/01/2011 - 23:10 | 1624962 I am Jobe
I am Jobe's picture

Need to bring back the Guillotine and clean up thii mess. I want to be the basket holder.


Thu, 09/01/2011 - 23:40 | 1625060 topcallingtroll
topcallingtroll's picture

What a dream job!

Bring me the head of Blankfein so that I may shit upon it and gaze upon my marvelous works.

Thu, 09/01/2011 - 23:12 | 1624974 BlackholeDivestment
BlackholeDivestment's picture

September sure looks like a good time to go on vacation outside of the city. Great riding weather time of the year.

Thu, 09/01/2011 - 23:15 | 1624982 holdbuysell
holdbuysell's picture

It'll be interesting to see how consumer confidence moves relative to this, all else holding equal, which I realize is difficult to control for.

Fri, 09/02/2011 - 01:15 | 1625251 Kali
Kali's picture

Do the bank runs start now? 

Thu, 09/01/2011 - 23:16 | 1624984 gbresnahan
gbresnahan's picture

I'm having to hold back my applause because I'm not buying it.  It sounds wayy too good to be true.  Perhaps a little sideshow to regain the support of the commoners then back to the pillage of their bank accounts.  I wonder if this is foreshadowing of a precipitous market drop.  We'll find out soon enough.

Thu, 09/01/2011 - 23:34 | 1625047 Dburn
Dburn's picture

I'm having to hold back my applause because I'm not buying it.  It sounds wayy too good to be true.  Perhaps a little sideshow to regain the support of the commoners then back to the pillage of their bank accounts.  I wonder if this is foreshadowing of a precipitous market drop.  We'll find out soon enough.

I read about the possibility of this happening. Just so happens that the agency head is a left over Bush appointee. So I'm wondering if this guy wasn't pushed or enticed into pushing all the banks into the hands of the GOP or  some other shady shit I'm too dumb to think of. Start the suit now. Obama looks like he has finally gotten tough on the banks. Big financial Donations stop coming in, while the suit drags out through the next election cycle while the GOP says "give us campaign money and zero for Obama . It's our guy in there, we'll get rid of him and drop the suit."

I don't hold that up as a high level possibility as the banks have rolled the politicians so many times that they could snort cocaine through them. What ever it is, it has slime behind it as if someone didn't get paid.


Thu, 09/01/2011 - 23:18 | 1624989 Awakened Sheeple
Awakened Sheeple's picture

BAC is toast. Could this be not so much a despiration move, as a way for the investment banks to consolidate more power (absorb BAC)?

Thu, 09/01/2011 - 23:22 | 1625003 Awakened Sheeple
Awakened Sheeple's picture

How does Warren Buffet fit into this puzzle? No way he willingly dumps $5 billion of his money knowing its going down the toilet.

Thu, 09/01/2011 - 23:33 | 1625041 GoldmanSux
GoldmanSux's picture

Glad you asked. Wells Fargo will buy BAC well north of Buffett's strike price, keeping his same pro rata share in the combined entity. One big east coast bank, one big west coast bank. Leaving Citi. North Carolina has become extinct in the banking world.

Fri, 09/02/2011 - 01:04 | 1625232 snowball777
snowball777's picture

All of the LBO goodness with none of the bitter hostility; good theory there.

The finance equivalent of the line from "Colors",..."son, how about we walk down and fuck em all."

Thu, 09/01/2011 - 23:42 | 1625063 azusgm
azusgm's picture

$5billion may not be such a big deal if there was an agreement that products like those made by KO and KFT would not be kicked out of the SNAP program. BRK could be funneled money through infrastructure goodies connected to a jobs program.

That $5 billion may not come back as a win on BAC, but in other ways.

Fri, 09/02/2011 - 10:39 | 1626421 CoolBeans
CoolBeans's picture

Eh, I'll be the first to admit that I don't undertand creating accounting but perhaps the B of A investment is two fold...bought B of A some time and some possible consumer confidence but in the end, is a way Buffett negotiated out his billion dollar unpaid tax issue while visiting with the POTUS  (well, that a fundraiser or two is surely worth a shredded IRS or SEC file, right?)

Thu, 09/01/2011 - 23:21 | 1625000 WilliamShatner
WilliamShatner's picture

Sulu: Captain, we have the bankster mother ship in range.





Thu, 09/01/2011 - 23:31 | 1625033 HyperLazy
HyperLazy's picture

Make it so.

Thu, 09/01/2011 - 23:53 | 1625098 James T. Kirk
James T. Kirk's picture

So some strange reason, I find myself in total agreement with your post.

Fri, 09/02/2011 - 01:30 | 1625263's picture

Two Kirks? That hasn't happened since Mirror, Mirror... or was it The Enemy Within... or was it Whom Gods Destroy... or was it What are Little Girls Made of?

Fri, 09/02/2011 - 00:15 | 1625148 Jim in MN
Jim in MN's picture

We need more ethics, Scotty!


Fri, 09/02/2011 - 10:36 | 1626411 CoolBeans
CoolBeans's picture

Dammint Jim, I'm a doctor....not a economist!

Fri, 09/02/2011 - 10:33 | 1626394 CoolBeans
CoolBeans's picture

Fire everything!

Thu, 09/01/2011 - 23:22 | 1625001 GoldmanSux
GoldmanSux's picture

Good thing Obama spent all summer vacuuming in the Wall St/banking donations. Now he is free to grandstand and fuck them all. Karma.

Thu, 09/01/2011 - 23:24 | 1625011 Careless Whisper
Careless Whisper's picture

Pure Propaganda

They sue for $30 Billion and settle for $5 Billion -- split 6 ways and its $800 million per bank. Pfftt.

Lunch money.

Where's the handcuffs?

Thu, 09/01/2011 - 23:33 | 1625043 topcallingtroll
topcallingtroll's picture

Exactly, but after 2012 elections so obama can look tough and pick up votes.

Fri, 09/02/2011 - 01:33 | 1625267 doomandbloom
doomandbloom's picture


Thu, 09/01/2011 - 23:31 | 1625030 topcallingtroll
topcallingtroll's picture

It really makes sense.

Tea party hates criminal banks
Socialists hate criminal banks
The poor have always hated banks.

No one likes the top banks. This is obama's way to try to squeak thru 2012. It takes several years for a lawsuit to get resolved. After 2012 it will quietly go away.

Fri, 09/02/2011 - 01:12 | 1625249 blunderdog
blunderdog's picture

Most plausible prediction so far.

Thu, 09/01/2011 - 23:33 | 1625040 dick cheneys ghost
dick cheneys ghost's picture

No participation in the economy until wall st bankers go to GITMO........fines wont cut it........30 yrs to life for all involved..............

Thu, 09/01/2011 - 23:34 | 1625048 topcallingtroll
topcallingtroll's picture

And lots of buggery. Dont forget the buggery.

Thu, 09/01/2011 - 23:51 | 1625091 Calmyourself
Calmyourself's picture

Quaint term buggery, so descriptive it sounds like an action..  Up my meds Doc quick..

Fri, 09/02/2011 - 00:28 | 1625042 G-R-U-N-T
G-R-U-N-T's picture

Is Obama the only thing standing between the banks and the pitchforks?



Thu, 09/01/2011 - 23:37 | 1625052 holdbuysell
holdbuysell's picture

Show me bankrupt, deceased TBTF banks and I'll believe it.

Until then, it's just a show.

And we still have a global debt problem to these TBTFs.

Thu, 09/01/2011 - 23:42 | 1625064 Caviar Emptor
Caviar Emptor's picture

It's always been about BAC. The March 09 stock market runup was timed to save BAC so they could quietly do a secondary as a way to recapitalize (while pretending to still be a private, solvent, respectable bank). BAC led the way up and is now leading the way down, which could get much much worse at exactly the wrong time (as always). Uncle Warren's beer money clearly was not enough

Thu, 09/01/2011 - 23:48 | 1625078 anonnn
anonnn's picture

And all 50 states AGs are expected to join the siut against BofNYMellon and State Street based on Harrry Markopolos'investigation of fraud on currency trades via false buy/sell prices...that cost pension funds bigtime. 

I believe BNYM provided trust services  to Bof A that were involves.

Thu, 09/01/2011 - 23:54 | 1625101 Caviar Emptor
Caviar Emptor's picture

Yes. And the worst of it: those suits are felt to pave the way for private lawsuits which would dwarf the state AGs suits. The complaints filed by the Nevada AG are devastating, charging fraud and misconduct at every step from mortgage origination through securitization AND improper mortgage mods after 2008 (!) And the claims are not limited to Countrywide. This could kill the bank as the vultures will rush to recover what they can

Fri, 09/02/2011 - 00:26 | 1625164 G-R-U-N-T
G-R-U-N-T's picture

Markopolos and Black would be a hell of a team indeed.

Fri, 09/02/2011 - 00:52 | 1625206 anonnn
anonnn's picture

and Brooksley Born and Cath. Austin Fitts, too.

Those 4 have the demonstrated experience and credibility to reccomend others aplenty for all staffing of a Wizards Financial Regulatory Agency.

Integrity knows integrity.

Fri, 09/02/2011 - 01:36 | 1625269 delacroix
delacroix's picture

nomi prins

Thu, 09/01/2011 - 23:56 | 1625104 whaletail
whaletail's picture

Got FAZ? 

Fri, 09/02/2011 - 01:09 | 1625242 snowball777
snowball777's picture

Ain't never gonna do it without the FAZ on...

(apologies to Steely Dan)

Thu, 09/01/2011 - 23:57 | 1625112 you enjoy myself
you enjoy myself's picture

i'm voting that this is just a precursor to refinancing, and reducing lots of principle, on every mortgage in the country (well, i guess the 90% that fan/fre/fha control), to be announced by O on thursday night.  O knows that there's no way the economy recovers, and no way he gets re-elected, unless underwater housing debt is wiped out.  i wouldn't say its stealth nationalization, rather stealth monetization.  BAC and the rest will take big lumps (providing an unbelievable 2nd opportunity for a 10-bagger), provide the capital to the GSE's so they can give everyone a cheaper house (its revenue neutral!), then the Fed will bail them out in ways i'm not smart enough to detect.

after literally being forced to acquire Countrywide and ML, there's no way the admin alows BAC to go ch11.  knowing how corrupt the govt is, i'd even bet BAC won't fail simply because Buffet met with O the day before he pumped in $5B.

Fri, 09/02/2011 - 00:43 | 1625188 Founders Keeper
Founders Keeper's picture

[i wouldn't say its stealth nationalization, rather stealth monetization]---you enjoy myself

Hi enjoy.  I think you were right the first time.  This is part of the Obama administration's plans to officially nationalize residential properties.  Socialists believe housing is a right.

So, the Govt holds your title.  So what?  The govt offers you a sweet deal:  A low rate, fixed, 50-year mortgage, and huge principle reduction.  The trade off?  The govt retains title, loan, and requires the home owner to maintain "safe" "green" compliant property within the house.  No "dangerous" contents in the home.  Dangerous, such as asbestos, lead paint, inefficient non-green appliances, and...oh...GUNS.


Fri, 09/02/2011 - 10:27 | 1626368 CoolBeans
CoolBeans's picture

OMG - I hadn't thought about that little blurb in most mortgage docs.  Well, guns aren't inherently dangerous, only people are, right?  (Compliance "geek"...looking for loophole). 

Hmmm, from my cold, dead hands, is my position on that.  Scary stuff.

Thu, 09/01/2011 - 23:58 | 1625114 onlooker
onlooker's picture


Question for the brightsters.

 In that the U.S. Financial industry infected the World with toxic devices tranched, sliced and diced into deadly digestible leveraged to infinity “investments, derivatives”. In that the US investment industry destroyed the US Economy AND the World economy--------


Can it be that the US Government, owned by major money, is protecting the bankers against other Nations attempting to not only get their money back but use a World court to put some of these gentlemen sons of bitches in jail or maybe draw and quarter them.


In this world of nada believability of any rational and informed person in government or media or large and leading institutions, skeptical views may be expected.


In that if George Bush had beat up Enron like he should have, he could literally have saved the World financially. In that if Obama had taken on the Derivative Crookersters as he was sworn to do in protecting our Nation, he would have avoided opening up the gates (where Bush had dropped us off) and led us to straight to Hell.


Blood poor show Mr. Presidents.

Fri, 09/02/2011 - 00:39 | 1625187 gmj
gmj's picture

Yes... does this somehow deflate the derivatives bubble?  Or make it worse? 

Does anyone know a good crystal ball repairman?

Fri, 09/02/2011 - 01:11 | 1625246 blunderdog
blunderdog's picture

Nah.  The World Court has ALWAYS been irrelevant to Americans.

Fri, 09/02/2011 - 00:03 | 1625117 onlooker
onlooker's picture


Fri, 09/02/2011 - 00:00 | 1625119 James T. Kirk
James T. Kirk's picture

I could not think of a more clever way to nationalize a bank, than by nationalizing "Bank of America." Of course , the Messiah would probably fuck this one up, too. I can see it all ....."Bank of O'Merica."

Fri, 09/02/2011 - 00:02 | 1625125 Jim in MN
Jim in MN's picture

Well maybe someone in the WH finally woke up.

Big bank bonuses this Christmas = Obama loses

Heckuva jobs plan there, POTUS.  Golf clap.

Now get all the GS and JPM alumni swine out of the executive branch and we might, MIGHT I say, start to take this drivel half seriously.

Fri, 09/02/2011 - 00:04 | 1625128 whaletail
whaletail's picture

Sorry to be a sycophant, but TD called this a year ago.

Fri, 09/02/2011 - 08:17 | 1625592 moneymutt
moneymutt's picture

There were subpoenas a year ago, this case was in the making a long time, as is most real justice, it is usually real slow. No doubt many people had to know it was very likely coming, but banks prolly hoping they could squash up until the moment the papers filed. They were so used to lying and stealing for so long they, like an accountant stealing from employer, thinks, because they got away with it a hundred times,this meant they never would get caught. But as the emails pile up, the whistle blowers sing, and the frauds get deposed...the curtain is pulled back, and suddenly lying, cheating and stealing is sort of wrong again.

Fri, 09/02/2011 - 00:04 | 1625129 Threeggg
Threeggg's picture

Refi everyone and the MERS nightmare is put too bed.

This is a setup (frontrun)

Fri, 09/02/2011 - 00:05 | 1625131 nyse
nyse's picture

I find it useful to operate under the assumption that Bambam will be reelected, without question. No chance the god King serves only one term. 

Fri, 09/02/2011 - 01:31 | 1625265 Jasper M
Jasper M's picture

By election day 2012, "Bambam" will not be electable as dog catcher. The Republicans will know they can run any idiot an win . . . and so they will. We'll either get a Big Government Republican, like Romney, or a panderer to ignorant creationism like Palin. 

Fri, 09/02/2011 - 02:02 | 1625294 blunderdog
blunderdog's picture

Sadly, I think you're right.  The liberal employed are still largely shielded from how shitty things are.  It's possible there'd be enough of a decrease in turnout to threaten his chances, but I'm doubting it.

If the Republicans run someone with any credibility, they can win.  But they don't have anyone with any credibility at the moment, so it's tough to imagine that happening.

Fri, 09/02/2011 - 00:08 | 1625133 samsara
samsara's picture

New Martin Armstrong.

Martin Armstrong: Eurobonds vs War

This decision that there is EITHER a unified Europe or it disintegrates will have to be made VERY soon. The volatility is appearing off the charts starting in November and lasting back and forth going into June of 2012. I am deeply concerned that the world will turn VERY, VERY Ugly and we are not talking about long-term stuff here.
Fri, 09/02/2011 - 00:21 | 1625158 Founders Keeper
Founders Keeper's picture

[...we do have a nagging feeling that the US will not purposefully do everything in its power to destroy its banking sector.]

True, govt doesn't want to destroy the banking sector; they want to control it.

Necessary move before officially nationalizing residential properties across the nation.  WE'RE ALL RENTERS NOW.  Socialists believe housing is a right.



Fri, 09/02/2011 - 00:28 | 1625168 Caviar Emptor
Caviar Emptor's picture

And from WSJ another perfectly timed torpedo:



Fresh Scrutiny of BofA

Fed Asks Bank to Supply Contingency Plans; Float of Merrill Shares Is Option



U.S. regulators have pushed Bank of America Corp. to show what measures it could take if conditions worsen for the Charlotte, N.C., lender, according to people familiar with the situation.

Executives of the bank recently responded to the unusual request from the Federal Reserve with a list of options that includes the issuance of a separate class of shares tied to the performance of its Merrill Lynch securities unit, these people said.


Fri, 09/02/2011 - 00:32 | 1625176 Cheyenne
Cheyenne's picture

This looks and smells like horseshit. FNM and FRE "lost more than $30 billion." Uh, yeah, and the Sears Tower is taller than a basketball goal.

Let's say this goes forward and the taxpayer "wins" with a $30 billion slam dunk. After the final judgment, it's discovered that, well, the taxpayer losses were in fact more than $30B. Well then what?

Right. Taxpayers are collaterally estopped from bringing another suit.

From recent events, it looks like the bankster elites have learned their lesson (what? I don't have standing to sue for foreclosure without a promissory note?), hired competent lawyers, and are now using litigation as a tool to cap their losses.

Fri, 09/02/2011 - 00:34 | 1625177 moneymutt
moneymutt's picture

If I could take all the crazy predictions people have made on this site about what crazy takeover thing Obama Admin would do next, maybe people would stop saying such off the mark stuff.

Obama Admin was almost a compete continuation of Clinton/Rubin/Summers and W/Paulson financial policies, no more no less. Dodd Frank had some small good in it, as it made the banksters squeal like stuck pigs. Cantor even crowed that this reform (hardly) had made the banks cut back their donations to Dems, and increase bribes to Repubs, Cantor was happy because his job of fundraising was now easier as Wall Street was not paying, playimg both parties but turning to Repubs..Cantor said Wall Street "had buyers remorse" about having funded Obama.

it seems to me Obama had promised to be nice to these guys, but when he said, hey people have pitchforks, we gotta do a little reform to keep them happy on plantation, I gotta talk bad about you sometimes, they reacted like the overindulged spoiled brat children they are and said they would hate him forever. So what Obama got to lose by taking on fat cat bankers, they already turned on him for mild, smart for banks in long term stuff, WS money is gone, so why not get a little populist, a little law and order

Fri, 09/02/2011 - 00:33 | 1625179 Pike Bishop
Pike Bishop's picture

Push them over the cliff, ....bail them out again?

From the beginning.... we never needed these fuckin' guys. We just need what they do in the financial system. Benny and the Inkjets can beef the second tier, while these frauds get taken down one at a time. I'm fine with burning the markets. We're all just standing around waiting for them to burn themselves to the ground anyway. How many decades do want to do that?

The point is to put the ball in play and see if somebody bobbles something. These guys have been hiding in the shade, it's time for the light of day.

Who cares what the payment is.  The FHFA has to bring a preponderence in Federal court. Ya don't know what will come out.

Dream come true, they pay some shit fine, but 15 Grand Juries are called.

If somehow criminal charges are brought on just one of these fuckers, the financial system will get better real fast.

And this Country can finally have some decency and self-respect, and begin to get well again.

I can't see this happening, because we are a festering shithole.

But thank you for a few blessed minutes of relief from the shithole.

Fri, 09/02/2011 - 00:39 | 1625186 Caviar Emptor
Caviar Emptor's picture

And there's more, RoboSigning goes all the way back to the 1990s....from earlier today: 

NEW YORK (AP) — Counties across the United States are discovering that illegal or questionable mortgage paperwork is far more widespread than thought, tainting the deeds of tens of thousands of homes dating to the late 1990s.

Fri, 09/02/2011 - 00:47 | 1625201 Delmar
Delmar's picture

Principal Reduction?:

Anybody know anything about this? Are they going to get other banks to agree to a similar settlement and write down principal?


Fri, 09/02/2011 - 01:24 | 1625259 CrashisOptimistic
CrashisOptimistic's picture

Fuck principal reduction!

Where's the refund to those who paid off their mortgage?

Where's the recompense for the loss of net worth due to house price decline?

You borrowed the money.  Pay it back.

Fri, 09/02/2011 - 01:42 | 1625281 Delmar
Delmar's picture

I'm not in favor, just trying to figure out what's next. Is this the precedent?

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