The biggest Wall Street banks have spent more than $93
billion dealing with the fallout from the housing bust, settling disputes with
the U.S. government and homeowners. According to a Bloomberg report Now they
must face the Germans.
HSH Nordbank AG, DZ Bank AG and Sealink Funding Ltd. are
among firms that filed more than 30 lawsuits against Wall Street lenders in New
York state court last year claiming they were sold flawed mortgage products.
The litigation may contribute to about $25 billion in further costs for banks
to resolve claims on bonds not backed by the government, Compass Point Research
and Trading LLC estimates.
German investors’ appetite for higher-yielding debt helped
fuel the bubble that triggered the global credit crisis, forcing German
taxpayers to spend more than 300 billion euros ($406 billion) to shore up the
country’s biggest banks, which are now in varying stages of repaying the funds.
In “Boomerang,”
Michael Lewis’s book about the European debt crisis, he writes that when Wall
Street banks “sent their sales forces out to scour the world for some idiot” to
invest in their securities, a “disproportionate number of those idiots were in
Germany.”
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