US banks falls on mortgage fears

The US banking sector has today fallen on concerns that companies such as Bank of America may be forced to buy back mortgages which were the subject of recent foreclosures. As we mentioned in one of our earlier articles, the US authorities have launched an investigation into the foreclosures market amid concerns that legal procedures and property documents were not reviewed correctly and some foreclosures may well turn out to be illegal.

As a consequence, investors are now running scared amid fears that millions if not billions of dollars worth of mortgages may well have to be bought back by the banking industry, which would put further pressure on bank finances. This is just the latest in a long line of problems to hit the US banking industry, an industry which was bailed out to the tune of billions of dollars by the US authorities, but appears unable to pull away completely from the recession. There are also concerns that we could be on the verge of credit crunch part two and yet another worldwide economic downturn.

The next couple of months will be vital as to the direction of the worldwide economy and all eyes will be on the US, the UK, Europe and the Far East.