Three years after the Wall Street crisis and three years into the worst economic downturn since the Great Depression, the federal government all of a sudden decides to sue major banks on behalf of Fannie Mae and Freddie Mac. Jim Boswell, who’s no friend of the big banks, isn’t buying into the idea that the two federal housing giants were ripped off:
Enough is enough. At this point in time the Government and the FHFA have no right to sue the banking industry on behalf of Fannie Mae and Freddie Mac. That is a joke. When it comes to the financial crisis, Fannie Mae and Freddie Mac were Players (Big Players)—not naïve, innocent victims who were bedazzled by the banks. Not only were the GSE’s as bad as the banks leading up to the crisis, in more ways than not, they were ahead of the banks (and the regulators) in finding ways to add to their coffers while ignoring the risk they placed on the people of the United States of America.
Like Boswell, we have little sympathy for the Too Big To Fail banks. But it’s ludicrous to argue they were the sole cause of the housing bubble and subsequent crash. It’s even more ludicrous to go after them at a time when the economy is so fragile. Every dollar banks end up paying out to the government to settle lawsuits is one less dollar they can loan to businesses and individuals. Do we really want that?