All I can say is No, really?
The Federal Housing Agency, which oversees U.S. mortgage giants Fannie Mae and Freddie Mac is preparing to file suit against “more than a dozen” big banks, the New York Times reported.
I have long argued that until and unless the institutions responsible for knowingly selling off bad paper are brought to justice and forced to eat their cooking – that is, absorb the losses due to them for their conduct – we cannot claim that “market discipline” has returned in any meaningful way. This is a non-trivial problem, because as of today banks, especially in Europe, are running with very thin capital irrespective of their protests that everything is fine. It is not, as evidenced that there is no mark to the market and if there were they would all be instantly rendered insolvent. As such they are insolvent whether they wish to admit it or not, as the only value that any asset has is that which someone is willing to pay you.
Pretending otherwise may be politically expedient but it is factually bankrupt.
Lee ADDS: The Clinton Administration threatened the Banks with fines and closure if the REFUSED to make loans to people that were minorities. The Bush Administration warned Congress of the impending losses to be sustained IF this practice were not halted.
ACORN thugs paraded inside of banks in protest if any loans were turned down as the demanded loans be extended no matter what! Now the Obama Administration wants to sue! The DOJ has been threatening banks in a manner like the Clinton years.