Did Fannie Mae and Freddie Mac know what they were getting into?
That’s been the big lingering question in Federal Housing Finance Agency’s lawsuits against banks that sold residential mortgage-backed securities to Fannie and Freddie in the run-up to the subprime meltdown. Now U.S. District Judge Denise Cote in Manhattan has answered with a forceful “no,” handing a victory to the FHFA and its lawyers as trial approaches against the remaining defendants—Goldman Sachs & Co., Royal Bank of Scotland plc, Nomura Holding America Inc. and HSBC Holdings plc.
