To hear Fannie Mae and Freddie Mac tell it, they were hoodwinked by Wall Street, the unwitting buyers of $200 billion worth of lousy mortgage-backed securities. From the investment banks’ point of view, the two were the most sophisticated investors around and knew exactly what they were getting into.

Ultimately, the Federal Housing Finance Agency’s (FHFA) recent lawsuits against 18 of the world’s largest financial institutions on behalf of Fannie and Freddie may come down to one basic question: disclosure. Did the banks omit or misstate material information about the securities they sold to Fannie and Freddie?