Skip to content
Subscriber Only

Suing Banks Is Next Best to Letting Them Fail: Jonathan Weil

Sept. 8 (Bloomberg) -- The Vietnam War gave us the expression, “We had to destroy the village in order to save it.” The same kind of thinking might help explain the U.S. bank rescues of 2008: We had to save the banks in order to sue them.

Last week, the conservator for Fannie Mae and Freddie Mac filed lawsuits against 17 financial institutions to recover losses on faulty mortgage bonds sold to the two government-backed housing financiers. One of the defendants was Ally Financial Inc., the lender formerly known as GMAC that once was the finance arm of General Motors Co.