Banks Get Slapped Around By Fannie, Freddie, and 40 Attorneys General

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Do not foreclose this house! Photo: Kiyosha Ito/Getty Images

If you ignore all the money they make, it's not a good time to be a banker. Last Thursday, Fannie Mae and Freddie Mac, the gigantic quasi-governmental institutions that prop up the American housing market, told banks they would be held responsible for any losses resulting from problems with the foreclosure process. On Friday, Bank of America froze all foreclosures because it was accused of using false information and a random system when kicking people out of their homes. The banks have until October 18 to come up with a way of fixing the problem. This comes on top of the news that, sometime today, 40 states attorney generals will announce an investigation into the mortgage racket, which should press financial institutions to get their act together. Or at least that's the idea. [WP, WSJ]