FHFA Bank Lawsuit Conference Call @ 2 PM

MEDIA ADVISORY: U.S. Rep. Brad Miller to hold conference call briefing for reporters on lawsuits filed by the U.S. Federal Housing Finance Agency against 17 of the largest banks over faulty mortgage loans which helped lead the nation into the housing crisis.

September 6, 2011

Miller has repeatedly called on Edward DeMarco, Acting Director of FHFA, to do everything in his power to recover these funds. The Congressman is available for a media briefing at 2 p.m. today to discuss what happened to prompt the lawsuits; what needs to happen next to fix the problem; and what it all means for the taxpayer.

When: Tuesday, September 6, 2011
Start time: 2:00pm (EST)
Dial-in number: 1-308-344-6400
Access Code: 150881#

The conference call, led by Congressman Brad Miller, is happening NOW.  I'm listening in and I can tell you that the US government won't be collecting anywhere near the $196 billion headline number named in the lawsuit.

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FHFA Files a $196 Billion Lawsuit Against 17 Banks

The Federal Housing Finance Agency (FHFA), as conservator for Fannie Mae and Freddie Mac (the Enterprises), today filed lawsuits against 17 financial institutions, certain of their officers and various unaffiliated lead underwriters. The suits allege violations of federal securities laws and common law in the sale of residential private-label mortgage-backed securities (PLS) to the Enterprises.

Complaints have been filed against the following lead defendants, in alphabetical order:

1. Ally Financial Inc. f/k/a GMAC, LLC – $6 billion
2. Bank of America Corporation – $6 billion
3. Barclays Bank PLC – $4.9 billion
4. Citigroup, Inc. – $3.5 billion
5. Countrywide Financial Corporation -$26.6 billion
6. Credit Suisse Holdings (USA), Inc. – $14.1 billion
7. Deutsche Bank AG – $14.2 billion
8. First Horizon National Corporation – $883 million
9. General Electric Company – $549 million
10. Goldman Sachs & Co. – $11.1 billion
11. HSBC North America Holdings, Inc. – $6.2 billion
12. JPMorgan Chase & Co. – $33 billion
13. Merrill Lynch & Co. / First Franklin Financial Corp. – $24.8 billion
14. Morgan Stanley – $10.6 billion
15. Nomura Holding America Inc. – $2 billion
16. The Royal Bank of Scotland Group PLC – $30.4 billion
17. Société Générale – $1.3 billion

These complaints were filed in federal or state court in New York or the federal court in Connecticut. The complaints seek damages and civil penalties under the Securities Act of 1933, similar in content to the complaint FHFA filed against UBS Americas, Inc. on July 27, 2011. In addition, each complaint seeks compensatory damages for negligent misrepresentation. Certain complaints also allege state securities law violations or common law fraud. [read full FHFA release]

You can read the suits filed against each individual bank here. For some more information read Bloomberg: BofA, JPMorgan Among 17 Banks Sued by U.S. for $196 Billion. Noticeably absent from the list of companies being sued is Wells Fargo.

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DB here.  More color on the lawsuit follows.  The $196 billion number is purely a headline. Recovery amounts will be substantially less, likely 15-20% (based on the UBS lawsuit filed earlier this Summer).

• An FHFA spokesman said the agency is seeking to recover some portion of the losses incurred in purchases of the securities. “Actual recoveries would be determined based on filings by the parties, evidence and judicial findings. At this time, it would be premature and potentially misleading to estimate what recoveries would be,” she said in an email.

Michael Stegman, director of policy and housing at the The John D. and Catherine T. MacArthur Foundation, said Bank of America and other big financial institutions facing other suits may be less likely to settle immediately with FHFA for fear it will impact their ability to reach a deal with other groups.

Large financial institutions are facing investor lawsuits over problem mortgages as well, though these investors want the big banks to repurchase problem loans they sold them before. FHFA is reportedly seeking reimbursement for losses on securities held by Fannie and Freddie.

“If the representations and warrants from one failed mortgage-backed security are the same as another MBS with the same kinds of loans, the first settlement will likely set a precedent for the other,” said Stegman.

Comments

[DailyBail]

My guess for the BAC settlement is $8 billion, versus the $57 billion or so they are being sued for, if you include bac, countrywide and merrill lynch. I am listening to the conference call now.

[DailyBail]

Again, my apologies for the site going dead the last 3 days. I have the flu and it's not pleasant, though the fever is manageable with aspirin. I hope everyone else had a nice holiday weekend.

[john]

@DB,

Bummer, hope you're feeling a little better and can somehow make up for the shot to hell holiday. It was nice and quiet here. Took a 52 mile bike ride on the Cape Cod Rail Trail on sunday. The trail is paved and impeccably maintained, and the National Seashore was outstanding. Anyway get well cause the S is about to hit the F.

[thebestofspain]

I'm sure that whatever the TOTAL Settled for compared to the $196 Billion.... Obama will pay for out of his own pocket.
After all - he gave the Taxpayers' money away... . be accountable & responsible to replace it!

[Lovi @ Conference Center NYC]

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