Is The FHFA Lawsuit Against The Banks Just A Subversive Res Judicata To Bail Out The Banks?

That Zero Hedge has a jaded outlook on the world is pretty much clear by now. But even our cynicism is amateur hour compared to that exhibited by some of our readers. Below we present one outlook by reader Joseph, on how the FHFA "lawsuit" against the banks, a development that as we noted before stinks to high heaven from a purely (lack of ) logical standpoint, could be nothing less than Res Judicata in sheep's clothing, whose purpose is simply to facilitate the case for QE (banks tumble), then settlement of the settlement (banks soar), but not before the crony communists have built up a solid equity position in the names, QE3 is firmly in place, and Obama is seen as the crusader against the hated banks. Is it possible? Who knows. We will find out as the affidavits start trickling in.

Some brainstorming from Joseph:

"Issue preclusion" in first suit "fully and fairly litigated" is res judicata in all subsequent cases even if parties are different.


1. Initiate Fed Fannie/Freddie suit and stay all other litigation while bank panic ensues.
2. Drag down market and start QE3 while bank directors shovel money into Obama's campaign.
3. Bernanke buys the shitty MBS and worthless bank stock "to save economy," stocks up, bonuses saved, election won!
4. Throw the suit and lose (on a technicality!) creating res judicata so banks thereafter can win based on res judicata in all the other state and federal cases
5. Banks walk from all litigation winners so screw the attorney generals settlement and the New York state BOA litigation.
6. Taxpayers pick up tab TWICE, once for the original fraud MBS sold to F/F and once for QE3 to "save the economy."
7. Obama is a lawyer and this is basic "con" law.
8. Occam's razor.  Wells Fargo, the one not sued, is the one going down, IMHO.
9. On the other hand, I'm a sick twisted fuck, so what do I know.


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