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This homeowner is suing from the other end. Now investors are going after the banks for fraud.
We knew this would happen sooner or later: The investors who got scammed by the big banks over mortgage securities want their pound of flesh. I wonder how they're going to weasel out of this one? Will they buy themselves some more judges? Stay tuned:
According to a New York Times report, Bank of America, JPMorgan Chase, Wells Fargo andCitigroup, among others, have been sued by a full spectrum of plaintiffs in connection with more than $1 trillion worth of mortgage securities. Investors have gone to court seeking to have the banks buy back the bum securities, while prosecutors are accusing the banks of fraud and SEC regulators claim they deceived investors about the failed instruments.
Should the dominant forces on Wall Street lose all of the litigation in a worst case scenario, it could cost them as much as $300 billion. One of the major pending lawsuits is a $200 billion case filed by the Federal Housing Finance Agency that argues the banks tricked mortgage financiers into buying faulty securities.
So far, banks have settled only a few cases against them -- already paying out billions of dollars to repurchase bad securities -- and costs for future settlements and judgments are expected to overshadow what the institutions have spent thus far, according to the Timesreport.
Among the major banks involved, JPMorgan Chase, Wells Fargo, Bank of America and Citigroup are four of the top five political contributors from the commercial banks industry, and together with others in the financial sector played a major role in the 2012 election cycle. Giving mostly to Republicans, the four banks combined to spend more than $10 million in contributions larger than $200. They were also all among GOP presidential candidate Mitt Romney's top ten contributors in this year's race.