U.S. sues 17 banks over MBS sold to Fannie, Freddie

The Federal Housing Finance Agency sued 17 banks Friday, seeking damages from the sale of soured mortgage-backed securities to Fannie Mae and Freddie Mac. The banks include Bank of America (BAC) and its two acquisitions Countrywide Financial Corp. and Merrill Lynch. Other American firms targeted include Citigroup (C), JPMorgan Chase (JPM), Goldman Sachs (GS), Morgan Stanley (MS), Ally Financial (GJM), General Electric Co., (GE) and First Horizon National Corp. (FHN). Foreign banks sued by the FHFA include Barclays Bank (BCS), Credit Suisse (CS), Deutsche Bank, (DB) The Royal Bank of Scotland (RBS), Société Générale, HSBC North America Holdings, and Nomura Holding America. Wells Fargo (WFC) is missing from the FHFA lawsuits. The FHFA alleges these institutions, their executives and some lead underwriters violated federal securities laws, violated common law, failed to conduct proper due diligence and provided allegedly false information when selling these products. What the FHFA seeks in recovery will not equal what the GSEs paid for the MBS sold. However, in each suit, the FHFA disclosed how much Fannie and Freddie bought from each particular bank and subsidiary in the case of BofA.

  • JPMorgan Chase: $33 billion
  • RBS: $30.4 billion
  • Countrywide: $26.6 billion
  • Merrill Lynch: $24.8 billion
  • Deutsche Bank: $14.2 billion
  • Credit Suisse: $14.1 billion
  • Goldman: $11.1 billion
  • Morgan Stanley: $10.5 billion
  • HSBC: $6.2 billion
  • Bank of America: $6 billion
  • Ally Financial: $6 billion
  • BarCap: $4.9 billion
  • Citi: $3.5 billion
  • Nomura: $2 billion
  • Société Générale: $1.3 billion
  • First Horizon: $883 million

Write to Jon Prior. Follow him on Twitter @JonAPrior.

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