Feds Sue Deutsche Bank Over Bad Mortgages
The U.S. government is looking to recoup as much as $1 billion in anticipated losses it says were caused by Deutsche Bank's reckless lending practices.
The U.S. government is looking to recoup as much as $1 billion in anticipated losses it says were caused by Deutsche Bank’s reckless lending practices. Prosecutors in New York are making the case that the bank and subsidiary MortgageIT knowingly provided thousands of government-backed loans to unqualified borrowers, then lied about it when confronted by officials. The government has been slow to file claims against banks involved in the mortgage crisis but may now be gaining momentum. — KDG
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The bank had “powerful financial incentives to invest resources into generating as many F.H.A.-insured mortgages as quickly as possible for resale to investors,” the complaint says. “By contrast, Deutsche Bank and MortgageIT had few financial incentives to invest resources into ensuring the quality of its F.H.A.-insured mortgages.”
At a news conference, the United States attorney for the Southern District of New York, Preet Bharara, said that Deutsche and MortgageIT had “indulged in the worst of the industry’s lending practices.”
The defendants ignored every red flag, he said, and “repeatedly abused the public’s trust.”
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The case involves a major confrontation between the president and Congress that also could affect the 2020 presidential campaign.
Some experts believe bankers are depriving small businesses of affordable loans in order to line their own pockets.
Jay Clayton represented big banks and corporations as a law partner at Sullivan & Cromwell. At the Securities and Exchange Commission, he will be expected to police such companies.
Whatever the differences between the two nominees, either will function as an emissary of the powerful who control America. That’s the conflict of interest we all should be talking about.
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