U.S. to Reportedly Sue Big Banks Over Mortgage Securities
{{#rendered}} {{/rendered}}The Federal Housing Agency, which oversees U.S. mortgage giants Fannie Mae and Freddie Mac is preparing to file suit against "more than a dozen" big banks, the New York Times reported..
The suits -- which seek billions in compensation -- allege that lenders including Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank inaccurately represented the mortgage securities they put together and sold during the housing bubble.
The report sent Asian and European equity markets lower and was weighing on U.S. stock futures. Shares in Deutsche Bank fell more than four percent in Frankfurt, dragging the German DAX 30 index down 2.7 percent, MarketWatch reported.
{{#rendered}} {{/rendered}}"The U.S. banking sector has already suffered a massive loss of confidence and remains incredibly fragile," according to Forex.com research director Kathleen Brooks. "This lawsuit and the massive sums involved may aggravate the problem and cause another leg lower in the financial sector."
The case reportedly is expected to be filed Friday or by Tuesday at the latest, before a three-year statute of limitations for the housing agency to file claims expires Wednesday.
That day also marks the third anniversary of Fannie Mae and Freddie Mac's takeover by the federal government.
{{#rendered}} {{/rendered}}Three years after Lehman Brothers collapsed, marking the start of the financial crisis, the legal ramifications show no signs of abating. Among ongoing cases, state attorneys general are in talks for a settlement over abuses by mortgage servicers including Citigroup and Bank of America.