Obama Comes Full Circle

On a clear cold winter day in January 2009, Obama took office with by and large a democratic Congress, with two independents siding with the democrats giving the democrats a majority in both houses. After swearing in, President Obama could have challenged the law signed by GW Bush and led the nation to repeal the $700 billion bank bailout plan, but he chose not to do so.

Today, just short of two years and nine months later, there is news that the Federal Housing Finance Agency ("FHFA")under Obama has threatened to sue the very banks that received the bailout cash.

If I understand this correctly, the US government had bailed out the nation's largest banks, fearing that they would ruin the world economy should they fail. The Obama administration tacitly doled out $700 billion to aid the failing banks knowing full well that they had handed out mortgages to unqualified borrowers by falsifying their qualifications on their loan applications during a real estate bubble, and that these borrowers became insolvent when they lost their jobs during a normal economic slowdown.

The FHFA, claiming that Fannie Mae and Freddie Mac were deceived by the banks by selling them lies-backed mortgages, now plans to sue to get their money back, the very money that was lent by their boss, the United States President, with full knowledge of such misrepresentations so that the world economy could be stabilized.

I am in need of a reality check.

Reality check #1 -- a recap: The US government knew that bailout money was given to the banks based on the knowledge that they had made loans based on false and misleading information, and now the US government, wanting its money back, is planning to use its agencies, which by the way failed to perform their due diligence before buying these loans from the banks, to claim that they were misled by the same false and misleading information on which the bailout was approved and handed out in the first place? Give me a break.

Reality check #2: The world economy has not been stabilized. The US unemployment figure is still at 9.1 percent. To attempt to take the money away from the very institutions that are the backbone of the world's economy now is to replay the condition in 2008, confronting a possible collapse of the world's financial structure.

Reality check #3: The idiot index needs to be re-calibrated for new lows.

Let me propose a solution.

To all the CEOs of banks: Admit that you were greedy, that you overreached and are working to build a better, more stable economy by weeding out corrupt practices. Then tell President Obama, and Congress, that the financial markets or the economy ought not be pawns in the game of politics. However, if the politicians still insist to use them as pawns for political gains, then together, you should resign, hand over the responsibilities of running the world's biggest banks to Washington and walk off. Let everyone be poor and Barack return to his old job as a community organizer. That would indeed be a full circle for Obama.

Update 6:47 PST: The lawsuit is no longer a threat. It was filed.

One hour & 42 minutes ago: "NEW YORK (AP) — The government on Friday sued 17 financial firms, including the largest U.S. banks, for selling Fannie Mae and Freddie Mac billions of dollars worth of mortgage-backed securities that turned toxic when the housing market collapsed.

"Among those targeted by the lawsuits were Bank of America Corp., Citigroup Inc., JP Morgan Chase & Co., and Goldman Sachs Group Inc. Large European banks including The Royal Bank of Scotland, Barclays Bank and Credit Suisse were also sued.

"The lawsuits were filed by the Federal Housing Finance Agency. It oversees Fannie and Freddie, the two agencies that buy mortgages loans and mortgage securities issued by the lenders.

"The total price tag for the mortgage-backed securities sold to Fannie and Freddie by the firms named in the lawsuits: $196 billion.

"The government didn't say how much it is seeking in damages. It said it wants to have the securities sales canceled and wants to be compensated for lost principal, interest payments as well as for attorney fees." See http://news.yahoo.com/feds-sue-big-banks-over-sales-risky-investments-000212787.html

It seems like the game has changed from shoring up the world economy so everyone can prosper to everyone for himself and get the money while it's still there.

So the question to ask now is: What about me?

I am a victim too.

Can I join the government's lawsuit to recover my lost wealth resulting from the 2008 financial market crisis caused by the mortgage-backed securities fraud? I seek restitution and legal fees, but have not decided whether to plead for treble damages and interest in the alternative. How about an investors' class action? That ought to be interesting.