Saturday, September 3, 2011

US banks face suits on mortgage crisis

The federal housing agency is to sue key US banks including Bank of America over mortgage crisis.

Source: Press TV

The US Federal Housing Finance Agency (FHFA) is set to file lawsuits against several large banks over the US mortgage crisis that triggered a global financial meltdown.

The regulatory agency has accused more than ten major banks of misrepresenting the quality of mortgage securities they sold, and now seeks billions of dollars in compensation.

The lawsuits will be filed before Wednesday in a federal court to meet legal deadlines, The New York Times reported.

The American daily quoted three interviewees as saying that the largest US bank, Bank of America, Goldman Sachs, JPMorgan Chase and Germany's Deutsche Bank are among the accused.

FHFA says that the banks "failed to perform the due diligence required under securities law and missed evidence that borrowers' incomes were inflated or falsified."

The agency's move is seen as a blow to the banks' attempts to recover from the financial downturn.

According to the report, none of the accused banks agreed to comment on the situation, but argued privately that the general economic recession had caused the losses and any deception related to mortgages was irrelevant.

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