A spokesperson for the New York law firm Quinn, Emanuel Urquhart & Sullivan confirmed to HousingWire it has been hired by the Federal Housing Finance Agency, a move some say means the government-sponsored enterprises are going after bad mortgages it bought from originators. The spokesperson said the firm could not comment further. But according to a report in the Wall Street Journal, the firm represented MBIA Insurance Corp. to go after top banks, alleging it was talked into covering losses on mortgage-backed securities. Those cases are still pending. FHFA has held Fannie Mae and Freddie Mac in conservatorship since 2008. It issued 64 subpoenas to MBS issuers hoping to gain access to loan files and recoup billions. On the other side of that, major banks are struggling to get an accurate estimate on how much agency and private-label MBS investors are going to target on these repurchases and warranties. According to Barclays Capital, that number could be as high as $85 billion. Bank of America (BAC) set aside $872 million to cover those potential losses in the third quarter, but it has fluctuated between half that three months ago and 30% more a year ago. Stocks at major banks tumbled this week because of the industry’s escalating concern on how much the institutions would have to buyback. James Frischling, president and co-founder of NewOak Capital in Manhattan, called it a “trillion dollar problem.” “Fingers will be pointed and blame assigned, yet ultimately a settlement will be reached that is tough, but manageable,” Frischling said. Write to Jon Prior.