The housing bubble continues to plague banks. Just as they have settled more than $93 billion in suits brought by homeowners and the US government, Germany is now breathing down their throats.
Foreign firms have filed over 30 lawsuits against Wall Street lenders claiming they sold flawed mortgage products.
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The appetite of German investors for high yield debt helped trigger the global financial crisis.
Now, Germany is demanding reparations as its taxpayers face having to spend over €300 billion to shore up its largest banks.
The global marketing of subprime mortgage bonds that were given top credit grades by ratings agencies has resulted in a lawsuit by the US Justice Department against McGraw-Hill’s Standard & Poors ratings agency unit.
The credit crisis of 2008 was global because the mortgage bonds were sold all over the world. It is ironic that banks in Germany ended up as owners of the securities because they are supposed to be funding local business and housing.
Larger institutions are discovering that the reason they lost money is because they were defrauded and time is running out on their ability to bring claims.