NY Times: The Worst Is Yet To Come For Nation's Banks


The ugliness of a mortgage debacle that defined the nation's worst recession in three genrations is the terrible gift that keeps on giving.

This morning's New York Times reports that "a fresh torrent of lawsuits" alleging shoddy mortgages "that imploded during the financial crisis" are poised to set the nation's largest lenders back on their heals, pushing profits lower and slowing any potential recovery by weakening the banks' ability to lend "just as the housing market is showing signs of life."

The Times' Jessica Silver-Greenberg reports that dozens of new claims against Bank of America, JPMorgan Chase, Wells Fargo and Citgroup could result in historical losses, reaching as high as $300 billion if the institutions lose all of the litigation.

"Analysts say that future settlements will dwarf the payouts so far," writes Silver-Greenberg. "That is because banks, for the most part, have settled only a small fraction of the lawsus against them."

The nation's banks are facing battles on three fronts: accusations of fraud, investors who say they were duped into buying bad mortgage securities, and other investors who want the banks to buy back bad loans.