17 Major Banks in the US get sued
Published: Friday, 2 Sep 2011 | 5:12 PM ET
A U.S. regulator sued a number of major banks Friday over losses on more than $41 billion in subprime mortgage bonds, which may hamper a broader government mortgage settlement with banks.
The lawsuits by the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, came as a surprise to the market and weighed on bank shares. The FHFA accused major banks, including Bank of America [BAC 7.25 
-0.66 (-8.34%) 
] , its Merrill Lynch unit, Barclays [BCS 10.60 -0.88 (-7.67%) ] , Citigroup [C 28.40 -1.60 (-5.33%) ] and Nomura Holdings of selling bonds backed by mortgages that should have never been packaged into securities.
-0.66 (-8.34%) ] , its Merrill Lynch unit, Barclays [BCS 10.60 -0.88 (-7.67%) ] , Citigroup [C 28.40 -1.60 (-5.33%) ] and Nomura Holdings of selling bonds backed by mortgages that should have never been packaged into securities.The other banks are: Ally Financial (formerly GMAC), Countrywide Financial, Credit Suisse, Deutsche Bank, First Horizon National, General Electric, Goldman Sachs, HSBC North America, JPMorgan Chase, Morgan Stanley, The Royal Bank of Scotland Group and Société Générale.
The litigation against banks is hurting share prices in the sector because investors feel unable to estimate the ultimate scope of a given bank's legal liabilities.
Bank of America, for example, had intended its proposed $8.5 billion settlement in June with investors in Countrywide mortgage securities to resolve most litigation tied to its disastrous 2008 takeover of that home loan provider.
American International Group is suing Bank of America for $10 billion
Other banks also face mortgage lawsuits. In May, the U.S. Justice Department sued Deutsche Bank [DB 36.27 -2.33 (-6.04%) ]
-2.33 (-6.04%) ] The FHFA's lawsuits follow an initial lawsuit in July against UBS [UBS 13.80 -0.55 (-3.83%) ] seeking to recover $900 million of losses incurred on $4.5 billion of debt.
-0.55 (-3.83%) ] seeking to recover $900 million of losses incurred on $4.5 billion of debt.Copyright 2011 Thomson Reuters.
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