Sunday, June 3, 2012

Feds Tag Banksters With Suits Over Crappy Mortgage Securities They Allegedly Unloaded Onto Pair Of Now-Defunct Financial Institutions

Reuters reports:

  • The U.S. government has filed three lawsuits against a group of large banks over losses on soured mortgage debt purchased by two small Illinois banks that failed in 2009. Acting as receiver for Citizens National Bank and Strategic Capital Bank, the Federal Deposit Insurance Corp sued a number of banks including Bank of America Corp , Citigroup Inc , Deutsche Bank AG and JPMorgan Chase & Co.

  • Seeking a combined $92 million, the lawsuits accuse the banks of misrepresenting the risks of residential mortgages they packaged into securities, causing losses for investors once the poor quality and defective underwriting became evident. [...] Two FDIC lawsuits were filed in Manhattan federal court and seek a combined $77 million, while a third filed in Los Angeles federal court seeks $15 million.

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