Archives for September 2013

Banks sold bad loans

The US Attorney General in US v. Countrywide Financial Corp. is stating that Bank of America’s Countrywide unit sold thousands of bad loans. We are talking about more than $1 BILLION in bad loans.  Greed is the word of the day.  You may have heard of GSE’s (Government-sponsored entities) which are none other than Fannie Mae and Freddie Mac.  Bad loans sold to these entities lost money due to a sketchy origination practices such as poor oversight and scrutiny along with the need to reduce the processing time frame from 60 days down to 15 days.  No one can perform the necessary due diligence in this short time period. The assistant US Attorney General thus is alleging in the lawsuit that such a process effectively guaranteed that the loans sold to Fannie and Freddie were of lower quality than represented by the Bank.   Now who is responsible for causing the worldwide financial crisis?