Oppenheim Law finds it predictable, but highly disappointing, that big-money investors might get much more money from the banks than regular folks. It is also quite concerning that the solvency of the banks might be threatened if the lawsuits succeed.
We live in a crazy, crazy world.
Investors who invested in bundled mortgages during the housing boom are now suing the banks who sold them the mortgage-backed securities. Investors are claiming that banks misrepresented the quality of the investments and want the banks to cover their losses.
Currently, these investors have filed lawsuits demanding more than $200 billion dollars in exchange for the securities themselves. Due to the drop in housing prices and large scale defaulting, the securities are worth much less than what investors paid for them back during the housing boom.
The investors want to return the substantially lower value securities for the money that they paid for them. The exact amount that investors are demanding is even greater than $200 billion since some of the lawsuits didn’t specify the amount sought.
AIG, still largely owned by the taxpayers, has also joined the party with a $10 billion lawsuit against Bank of America. AIG claims that it is also preparing similar lawsuits against other big banks including JP Morgan Chase and Goldman Sachs.
Consumers, meanwhile, are slated to get about $20 billion through the 50 state lawsuits. While not one big investor has been illegally thrown out of their home or been subjected to predatory lending, they are still gunning for the full amount allegedly owed to them.
On the other hand, consumers will soon not be able to sue banks individually. Consumers will have to rely upon their government to look after their best interests. With such shining examples of government effectiveness like the debt ceiling crisis, Attorney General Bondi’s suspicious firings of top foreclosure investigators, and the SEC’s poor enforcement of Wall Street, it is easy to see how consumers might be thrown to the side when it comes to recovering from the banks.
That might not even be the end of it either. With such huge lawsuits, banks might again be forced to resort to drastic measures like threatening to take down the entire world economy if they don’t get bailed-out.
That’s right, a real possibility if the investor lawsuits succeed is that ‘We the Taxpayers’ might have to bailout the banks once again.