If there is one thing that is generally accepted about the 2008 bailout of the banking system, it's that the big banks put up fraudulent mortgages as collateral for the federal government's bailout money. Two highly publicized lawsuits have established that the collateral was fraudulent.
So, in 2010, Nancy and Derek Casady filed a suit in district court against the big insurance conglomerate American International Group (AIG), Goldman Sachs, Societe Generale, Deutsche Bank, and Merrill Lynch, now part of Bank of America.
District court ruled the Casadys did not have standing to sue in that forum. So the Casadys appealed to the Ninth Circuit United States Court of Appeals. On Thursday (May 5), the appellate court threw out the suit without issuing an opinion.
"They sidestepped it," says attorney Mike Aguirre, who, along with his partner Maria Severson, represented the Casadys in the name of the United States government. The Casadys were not asking for damages for themselves. They wanted the bailout money to be put back in the hands of the federal government.
Aguirre and Severson are now preparing to go to the United States Supreme Court. "We knew at the beginning it would have to go to the Supreme Court."
One famous case was filed by Maurice (Hank) Greenberg, former chief executive of AIG. He claimed the bailout was unfair. Greenberg won the suit but got no monetary award. That case established that the mortgages used as collateral were toxic.
"That no bankers have been held accountable in court or by prosecution is our government's and our courts' failure, as recently mocked in the movie The Big Short," says Severson. "We are hoping the Supreme Court gives it the attention it is due."