By mid-2012, cumulative losses incurred in RMBS sponsored by Credit Suisse in 2006 and 2007 totaled over $11.2 billion, or approximately 12 percent of total initial balances of approximately $93.8 billion.
The Attorney General seeks investor damages to recoup these losses, as well as other equitable relief.
RMBS Working Group members contributed significantly to this effort. The Federal Housing Finance Agency Inspector General played a key role working with the New York Attorney General’s Office on the investigation, providing investigators and lawyers, the U.S. Securities and Exchange Commission collaborated and assisted with the case, and the Department of Justice provided resources from U.S. Attorney’s offices around the country as well as from the RMBS Coordinating Team.
“Credit Suisse allegedly engaged in a far-reaching scheme to defraud investors, including Fannie Mae and Freddie Mac,” said FHFA Inspector General Steve Linick. “As victims, Fannie Mae and Freddie Mac have sustained significant losses, which to date have been borne by taxpayers. This lawsuit sends the clear message that reckless lending practices will not be tolerated.”
“Today’s filing by our working group partner and my fellow co-chair New York Attorney General Schneiderman, represents another step toward holding accountable those whose actions led to the financial crisis and hurt so many Americans,” said Principal Deputy Assistant Attorney General for the Civil Division Stuart Delery. “This action demonstrates the value and strength of the working group model and was made possible by contributions from a variety of members of the working group, who contributed resources, personnel and expertise to the development of this case.”
“The number and breadth of recent RMBS actions, and the coordination and sharing among enforcement authorities that underlie them, prove that the whole of the RMBS Working Group is greater than the sum of its parts,” said Robert Khuzami, Director of the SEC’s Enforcement Division.
Today’s action is the latest part of Attorney General Schneiderman’s multi-pronged strategy to stem foreclosures, provide relief to struggling homeowners and hold accountable those responsible for the mortgage crisis.
Earlier this year, Attorney General Schneiderman was appointed by President Obama to co-chair the Residential Mortgage-Backed Securities Working Group. This joint investigation brings together the Department of Justice (DOJ), Department of Housing and Urban Development, the Securities and Exchange Commission (SEC), Federal Housing Finance Agency Office of Inspector General (FHFA OIG) and other federal agencies to investigate those responsible for misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities. It builds upon ongoing state and federal investigations, while also launching new ones.
Deputy Attorney General Virginia Chavez Romano supervised the investigation, which was conducted by Investor Protection Bureau Deputy Chief Thomas Teige Carroll, Senior Enforcement Counsel Harriet Rosen, and Assistant Attorneys General Veronica Montenegro, Christine Stecura and Brian Whitehurst. The Attorney General also received substantial support from the FHFA OIG during the course of the investigation.