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US to sue big banks over mortgages

The suits — which seek billions in compensation — allege that lenders including Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank inaccurately represented the mortgage securities they put together and sold during the housing bubble.

We need criminal indictments, not civil lawsuits. For the banks, a big fine is just the cost of doing business.

Karl Denninger

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.

And ethically and morally bankrupt too. Yes, I know, how quaint of me to expect the banksters to be ethical and moral.

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