The U.S. Executive presented last Friday most lawsuit to date against financial institutions.

Last Friday, September 1st, the Federal Housing Finance Agency, Federal Housing Finance (FAHF), an organization belonging to the Government of United States, Presented a lawsuit against 17 financial institutions, accusing them of negligence in actions associated with selling sub prime, so-called “sub prime”.


The role of financial institutions from the U.S. government, Fannie Mae and Freddie Mac

In 2008, two U.S. financial giants, Fannie Mae and Freddie Mac, Suffered from the attacks of the full current economic crisis there is no alternative to insolvency. Fannie Mae and Freddie Mac would be rescued by taxpayers’ taxes and nationalized financial institutions to become associated with FAHF.The lawsuit the U.S. government comes after the FAHF develop an investigation into the losses of Fannie Mae and Freddie Mac in recent months. The federal investigation revealed irregularities and irresponsibility committed by a number of financial institutions to sell shares when associated with mortgage loans.

The federal agency says that the mortgages jumped desirable limits of financial security and reported entities sold to Fannie Mae and Freddie Mac mortgage actions “contained omissions and false and misleading information.” The agency also states that positive appraisals were inflated property and wages of applicants mortgages in order to grant more loans. Therefore, Fannie Mae and Freddie Mac purchased about 189,000 million in shares of these subprime mortgages were considered as safe.

According to the agency of the U.S. Government for the purpose of the lawsuit is “recovery of the money that these banks have obtained in violation of federal securities laws and civil laws on the sale of private mortgage”.

The institutions demanded by U.S. FAHF

Among the entities sued by the U.S. FAHF no financial organizations the likes of Barclays Bank, Bank of America, Citigroup, Morgan Stanley, JP Morgan Chase, HSBC Bank or Deutsche Bank and so a total of seventeen.The amount required by the U.S. government reported to banks is close to 2,000 million dollars, taking the palm of First Horizon National Corporation, a banking group that provides many financial services and that 883 million are required of dollars.

The U.S. government believes that First Horizon mortgage operations carried out worth 1.74 trillion dollars just for the 2006 fiscal year. Last Friday, after the announcement of the government complaint, First Horizon suffered a historic collapse in the stock market with its shares losing almost 7% of its value.although this is not the first time a federal agency of the United States claim to a financial institution, the U.S. government last July and accused the Swiss bank UBS, yes that is the biggest lawsuit to date in terms not only of money but also the number of entities involved.

To all this, many attorneys general in the United States have joined the growing irritation with irregular tactics and prepare bank sued various financial institutions for neglect and abuse in the granting mortgage.

Against abusive financial practices

With any luck, or rather many, this step taken by the U.S. government will become the beginning of the end of some extremely abusive financial practices which showed a lack of ethics of the big banks while leaving citizens unprotected.

Of course now must spread the example, push the boundaries of the United States and spread to many countries. Only then will the current financial and banking system would receive a warning and possibly take a step back in some irresponsible operations which, as has been more than evident in recent years, threatening the economy of all.