Posted by Leonard Steinberg on May 6th, 2013
Do you remember the housing bubble of 2008? It appears many have forgotten it already in this heated market. Most of those banksters guilty of robbing us blind escaped any form of punishment. The government failed in its roll to protect the consumer. Is there now a glimmer of hope that something will be done to prevent future mass deception in the banking industry? What about other potential areas of abuse?
New York Attorney General Eric Schneiderman said he will announce new enforcement actions against major financial institutions as part of his effort to protect New York homeowners after calling the first such lawsuit last year a template for future litigation. In October, Schneiderman sued JPMorgan Chase & Co., alleging that Bear Stearns, which JPMorgan took over in 2008, deceived mortgage-bond investors about defective loans backing securities they bought, leading to “monumental losses.” He said the case would be a model for future actions against banks that issued mortgage bonds during the real estate boom. He sued Credit Suisse Group AG on similar grounds the next month.
New York was one of 49 states that reached a $25 billion settlement with five mortgage servicers, including Bank of America, Wells Fargo and JPMorgan, to end a probe of abusive foreclosure practices. Schneiderman’s office had agreements with 12 financial institutions that preserved claims that might be filed against them, a person familiar with the matter said last year. The so-called tolling agreements prevented the statute of limitations, which bars litigation after a specific number of years have passed, from expiring.
Schneiderman helps lead a federal-state group formed to investigate misconduct in the bundling of mortgage loans into securities. The group includes the Department of Justice and the Securities and Exchange Commission.
Warren Buffet said appropriately we are certainly in for another bubble: the only problem is we don’t know what that bubble we be yet. The tech bubble was followed by the most recent housing bubble……is the entitlements bubble next? While the focus is on banker abuses, there are certainly many other areas of abuse that could cause significant consumer harm in the future and they seem to be mushrooming without enough opposition or intervention.