The banks named in the lawsuits aren't just US companies; three of them are based in the UK and one of those, RBS, is already majority-owned by the British government. The Telegraph noted “[T]hrough its US-based investment banking arm RBS Securities was hit with a $30.4bn claim, compared with $6.2bn for HSBC and $4.9bn for Barclays...For Barclays and HSBC the sums, while not small, would be far from existential, but for RBS the spectre of full-nationalisation remains a constant threat.”
The British, of course, are already suffering under an austerity regime that has yet to fix the economy even though working people are suffering and students are facing unprecedented costs for education.
Frankfurt, Germany-based Deutsche Bank is also a target of the lawsuits. The Eurozone is already in crisis, which pushed Deutsche Bank's stock down nearly 10 percent—a hit from the FHFA suit could be big trouble.
On Monday, Deutsche Bank's CEO Josef Ackermann gave a speech at a conference in Frankfurt where he said, “It is an open secret that numerous European banks would not survive” having to re-price the sovereign debt on their books at market prices (market price right now is, of course, rock-bottom).
Courtney Comstock said “The implication is that not just Eurozone countries are buckling under the pressure of Greece's, France's, and Italy's debts, but banks are too. It sounds like a desperate call for a bailout. Now.”
That's the problem—the financial system is global. Banks in Germany and the UK were buying mortgage-backed securities with mortgages across the US in them, and a debt crisis in Greece is making the markets shaky over here. It's a recipe for another round of financial crisis, but with austerity-mad governments in power in many countries (including our own) there's little appetite for more bailouts.
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