See you in court. XOXO.
The New York Times is reporting that the Federal Housing Finance Agency is launching a multibillion dollar lawsuit against several banks alleging they misrepresented the quality of mortgages sold during the housing bubble. Citing unidentified sources close to the matter, the article says that Bank of America, JP Morgan, Goldman Sachs and Deutsche Bank are among those listed in the suit.
The lawsuit stems from subpoenas the agency had issued to the banks last year and could be filed in the coming days. The agency oversees the operations of Fannie Mae and Freddie Mac who lost more than $30 billion during the credit crisis, partly due to the purchase of mortgage backed securities. The main argument behind the suit will claim that the banks did not perform the required due diligence that is required under securities law, and mussed evidence that borrowers’ incomes were falsified or inflated.
The agency filed a similar suit against UBS (UBS) in July, seeking $900 million for taxpayers and sources say the new suits will be similar. News of the potential lawsuits weighed on investors’ minds, sending shares of JP Morgan, Bank of America and Goldman Sachs lower in Friday trading.
Bank of America (BAC : NYSE : US$7.26), Net Change: -0.65, % Change: -8.22%, Volume: 296,888,529
Goldman Sachs (GS : NYSE : US$107.00), Net Change: -5.16, % Change: -4.60%, Volume: 7,995,791
JP Morgan (JPM : NYSE : US$34.64), Net Change: -1.66, % Change: -4.57%, Volume: 38,110,735
Deutsche Bank Ag (DB : NYSE : US$36.25), Net Change: -2.35, % Change: -6.09%, Volume: 3,433,623
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