Friday Night Fights: The FHFA Sues Everyone

This was a doozy, dropped on the markets at the end of the day Friday…

The Federal Government (via the Federal Housing Finance Agency) is suing 17 financial institutions for like tens of billions of dollars over mortgage fraud and the credit crash.  All your favorite dirtbags are named, even the ones that are now hiding under different brands (hello GMAC aka Ally Bank!).

Expect a ten-year dogfight followed by a massive catch-all deal a la the Global Settlement we saw stemming from the dot com boom/bust cycle not so long ago.  No one will have learned anything when all is said and done but there will definitely be some clawbacks and redistribution of ill-gotten gains…finally.

The effect on the stock market will also not be pretty, but sometimes you gotta burn out the town to drive the bad guys out from their hiding holes.

Full release from the FHFA here:  PLSLitigation_final_090211

My only question is why they waited so long.