U.S. Set To Sue Big Banks For Billions
Nearly every major U.S. bank, including JPMorgan Chase, Goldman Sachs, and beleaguered Bank of America, will be named in the suit, which seeks reimbursement for the riskier securities. These were backed by highly unstable subprime loans that led, in large part, to the 2008 financial meltdown.
The Times’ story quotes three anonymous sources briefed on the matter who say that the suit will come from the Federal Housing Finance Agency—the organization responsible for mortgage giants Fannie Mae and Freddie Mac.
In July the Federal Housing Finance Agency filed a $900 million suit against UBS for misrepresenting the quality of their bundled mortgages. According to the report this upcoming suit will be of a similar vein but obviously much larger in scope.
Fannie Mae and Freddie Mac lost upwards of $30 billion from investments in mortgage-backed securities that went sour.
The suits are set to be filed on Friday morning or Tuesday after the holiday weekend.
"It would be another blow for Bank of America, the largest US bank by assets, which has seen its share price battered by doubts over its reserves for mortgage-related losses, putbacks and litigation.
Bank of America could potentially face the biggest claim, according to data compiled by the news and data company Inside Mortgage Finance, whose research is regularly cited by the US government.
Countrywide Financial, the mortgage firm BofA purchased in 2008 at the urging of federal officials, and BofA together likely sold Fannie and Freddie more than $189bn in bonds from 2003 to 2008 backed by mortgages not guaranteed by the now government-controlled home loan giants, according to Inside Mortgage Finance."
More coverage from AFP.