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IT BEGINS: FHFA Sues 17 U.S. And Euro Banks
Courtney Comstock | Sep. 2, 2011, 3:58 PM | 1,998 | 12



Fannie Mae
US Preparing To Sue Banks For Billions Over Misrepresenting Safety Of Mortgage Securities

The FHFA has just announced mortgage-related lawsuits against 17 U.S. and Euro banks.

Bank of America has been sued over $30.85 billion in losses on securities.

Goldman Sachs has been sued over losses on $11.1 billion in securities.

Barclays has been sued for $4.9 billion in losses on securities.

UBS has been sued for over $900 million in losses on securities.

Nomura for over $2 billion in losses on securities.

Credit Suisse has now been sued, too.

Citigroup has been sued over losses totaling $3.5 billion in losses on securities.

Deutsche Bank has been sued for $14.2 billion in losses on securities.

JPMorgan has been sued for losses on $33 billion worth of securities. First Horizon, General Electric, and Ally Financial have been sued too.

HSBC has been sued over losses on $6.2 billion worth of securities.

Morgan Stanley has been sued over losses on $10.58 billion in Certificates issued in connection with 33 securitizations underwritten by the firm or its entities.

The lawsuits seek to recoup losses on a total of over $100 billion in securities. They are available for download on the FHFA's website.

Noteworthy: It sounds like the House Financial Services Committee was kept in the dark on this, signifying that the FHFA is acting as an independent agency on this one.

The lawsuits, and the others that will follow it, were anticipated as early as at least late yesterday when the NYTimes reported that banks would be sued for their roles in the mortgage crisis.

The lawsuits are said to try to recoup losses.

The news sent U.S. financials this morning down big time. The news is particularly bad for Bank of America, as they are already on shaky ground.

Here's the press release from the FHFA:

These complaints were filed in federal or state court in New York or the federal court in Connecticut. The complaints seek damages and civil penalties under the Securities Act of 1933, similar in content to the complaint FHFA filed against UBS Americas, Inc. on July 27, 2011. In addition, each complaint seeks compensatory damages for negligent misrepresentation. Certain complaints also allege state securities law violations or common law fraud.

As conservator of Fannie Mae and Freddie Mac, FHFA is charged with preserving and conserving these companies’ assets and does so on behalf of taxpayers. The complaints filed today reflect FHFA’s conclusion that some portion of the losses that Fannie Mae and Freddie Mac incurred on private-label mortgage-backed securities (PLS) are attributable to misrepresentations and other improper actions by the firms and individuals named in these filings. Based on our review, FHFA alleges that the loans had different and more risky characteristics than the descriptions contained in the marketing and sales materials provided to the Enterprises for those securities.

FHFA filed the complaints under the broad authority granted to it by the Housing and Economic Recovery Act of 2008. The U.S. legal system provides for addressing such alleged misrepresentations through the nation’s securities laws and traditional common law. FHFA is following those legal remedies in filing these complaints and seeks to recover on losses to the Enterprises that are the legal responsibilities of others.

Discussions regarding these matters have taken place with several of the firms receiving complaints and, where constructive, they will continue.

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Read more: http://www.businessinsider.com/it-begins-fhfa-sues-barclays-and-bank-of-america-2011-9#ixzz1WpbvxNzL

http://www.businessinsider.com/it-begins-fhfa-sues-barclays-and-bank-of-america-2011-9