The legal battles reflect the contradictions among the biggest monopolies and financial groups, and between states that represent rival imperialist interests. Such conflicts are growing acute alongside the contradiction between finance capital and the broad masses of working people.
The Federal Housing Finance Agency (FHFA) in the US sued 17 international financial groups in early September, alleging they unfairly sold about $200bn of mortgage-backed securities and demanding compensation for the losses suffered by the government sponsored firms, Fannie Mae and Freddie Mac. This is reported to be the latest in a barrage of mortgage-related litigation in such markets that trade fictitious capital.
Several giant banks have reacted angrily to the move by the FHFA. Bank of America, whose stocks have fallen steeply, said Fannie and Freddie “claimed to understand the risks inherent in investing in subprime securities” and yet were “now seeking to hold other market participants responsible for their losses”. In other words, Bank of America is arguing that the state sponsored firms have to bear the consequences of their own judgment, good or bad. Deutsche Bank is reported to have said that it would “vigorously defend against the action”. The list of institutions charged in the law suit includes HSBC, Société Generale, General Electric, Royal Bank of Scotland, Ally Financial and First Horizon.
Since Fannie and Freddie are in US government conservator-ship, and Royal Bank of Scotland is majority-owned by the UK government, the lawsuits have produced the unusual situation of Washington suing London over past losses.
The legal battles reflect the contradictions among the biggest monopolies and financial groups, and between states that represent rival imperialist interests. Such conflicts are growing acute alongside the contradiction between finance capital and the broad masses of working people. Faced with the wrath of the people, the biggest exploiters and plunderers are blaming each other and vying to weaken one another.