3 Sep, 2011
U.S. sues major banks over Fannie, Freddie losses – The Washington Post
The suits, brought by the Federal Housing Finance Agency, name 17 domestic and foreign banks as defendants. Among them: Bank of America, J.P. Morgan Chase, Goldman Sachs, Morgan Stanley, Citigroup and Deutsche Bank.
According to the court filings, those firms and others “falsely represented” the quality of the loans that were bundled into securities and sold to investors and “significantly overstated the ability of the borrower to repay their mortgage loans.” The result, the suits claim, were investments that were far riskier than the banks led taxypayer-backed Fannie and Freddie to believe, and the securities ultimately were worth a fraction of their original value.
Friday’s filings in New York and Connecticut represent an escalation in the government’s effort to recoup taxpayer losses incurred during the financial crisis.
via U.S. sues major banks over Fannie, Freddie losses – The Washington Post.
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