Mortgage-Backed Securities, Collateralized Debt Obligations, Subprime Loans: Officials Scramble to Rescue Banks, Borrowers and Stock Market, but Forget Defrauded Investors

In August, Wall Street pundent Jim Kramer went ballistic when he felt the Federal Reserve did not act fast enough to rescue the stock market. Washington officials from George Bush to Nancy Pelosi are vying over how and how much to make avalible to troubled mortgage holders to keep afloat. The Chairman of the Federal Reserve acknowledges the need to preserve the banking system.

But no one seems worried about millions of individual investors who have chunked billions of dollars into mortgage related securities while being told these were completely safe. Many securities which were rated AAA only months ago, have lost a fourth of their value or more and likely face further markdowns in the near future.

Other investments which carried lower ratings, but were hyped as perfectly safe, are worth less than half their purchase value and may be all but wiped out before the dust settles. Many of these securities were sold as CD substitutes to small investors and retirees and to pension funds. The fallout of the failure of such investments will be tragic.

When naïve investors were sold high flyers in 1999 their advisors should have have warned them this was gambling. Others were lied to through bogus research. Yet, almost none of these victims were reimbursed. This appears to be the ultimate outcome for those who were defrauded through mortgage debts.

Welfare is currently being designed for those who borrowed more than they can pay back. More welfare is forthcoming for banks which lent to those without the ability to pay. Rating agencies and other financial institutions continue to be exempt from liability for their roles. Yet there is no mercy on the horizon for those individuals and small institutions who are the only innocent victims of this fraud.

Shepherd Smith and Edwards represents institutional and individual investors nationwide in claims against securities firms. We have represented investors in more than 1,000 securities cases, including many involving mortgage securities. To learn whether we may be able to assist you with a claim contact us to arrange a free consultation with one of our attorneys.