Should new Etrade CEO file lawsuit against banks and mortgage lenders?
The mortgage portfolios likely had misrepresentations on documentation for the ratings supplied by the rating agencies. Many companies have already sued and collected huge settlements on this very issue. Etrade should be able to collect billions of dollars in damages ... seems like a no brainer to me.
Etrade purchased essentially all of the mortgage portfolios from other parties. I think they can prove that these mortgages were misrepresented to them. Why are they not taking action? Many companies have filed lawsuits and collected damages for these toxic mortgages that were packaged and sold. Etrade was the first publicized victim of holding these toxic martgages. These mortgages destroyed the company causing it to lose 95% of its value. Etrade has the best case to pusue and collect damages so why are they doing nothing and not pursuing litigation to restore shareholder value.
Lawyers for E-trade made the decision over two years ago that they did not have a case. Yes ETFC did buy some baskets of mortgages and sold those off to Citadel early '08 for pennies on the dollar. Where ETFC made a huge gamble and lost was in the "Home equity" loans, anybody walking in the door essentially got a loan with little credit research on those individuals and many had been underwater on 1st mortgages. Thats what happens when you work commission, you make the sale and be dammed the consequenses. There are more lawsuits against E-trade than the company itself is persuing.
I do not agree with you. Why wouldn't Etrade have a case to collect damages from miss represented mortgages? The home equity loans were not the main issue. It was the $3-4 billion CDO that was sold to Etrade and misrepresented. Etrade should be able to litigate and collect damages like all other parties have done that were sold these products.