Big Banks Face Their Toughest Foes – Almost Everyone



In news from Washington, investors who lost out buying mortgage backed securities have taken their battle against big banks to a new height. After several years of battling individually and via class actions to regain their losses, with little or no end in sight, fortune appears to have favored the big losers. Aligning themselves with millions of foreclosed upon borrowers makes for a powerful political lever.

As Congress begins deliberations over mortgage servicing legislation, all 50 states attorney generals are continually hammering out the details of settlements with banks, it is the borrowers who are about to be on the street who have the ear of politicians – and why not – there are so many. The Association of Mortgage Investors, which represents hedge funds, pension funds, and other investment entities, has entered the fray demanding improvements to servicing and transparency the banks do not want legislated. As if bankers thought people losing millions would ever forget…

Capital Hill

Capital Hill will finally hear all the voices

Lawmakers have been talking with consumer groups representing borrowers, as well as investors who share the common interest for some time now. And these unlikely collaborators are ever more determined to fix the problems with the industry. Legislation to force banks to revise their mortgage servicing now seems imminent, and regulators will surely have broader powers once the regulations are passed.

If banks are forced to buy back investor losses J.P Morgan Chase has put a price tag at $120 billion. The slowdown in home foreclosure filings dropped significantly once a halt in evictions was called for will likely become a flood once those postponed are re-instituted, so investors and borrowers obviously have a rather galvanized common interest. Should the millions of people who were affected by bad bank practices and Wall Street shenanigans join in a common push…

JP Morgan Chase

J. P. Morgan Chase

The big banks could face their biggest challenge yet in trying to circumvent new initiatives and carrying on business as usual. With enough pressure in the state houses and in Washington investors and borrowers may be able to leverage their own brand of justice. Never have so many millions found themselves in the same boat, at least not in recent history. This will be an interesting fight to watch.