Feds sued 17 financial firms including the biggest U.S. banks over risky mortgages

The 17 institutions are Ally Financial Inc., Bank of America Corp., Barclays Bank PLC, Citigroup Inc., Countrywide Financial Corp., Credit Suisse Holdings Inc., Deutsche Bank AG, First Horizon National Corp., General Electric Co., Goldman Sachs & Co., HSBC North America Holdings Inc., JPMorgan Chase & Co., Merrill Lynch & Co. and its unit First Franklin Financial Corp., Morgan Stanley, Nomura Holding America Inc., The Royal Bank of Scotland Group PLC and Société Generale.

September 2, 2011

Feds sue biggest U.S. banks over risky mortgages

New York, In a sweeping move, the government on Friday sued 17 financial firms, including the largest U.S. banks, for selling Fannie Mae and Freddie Mac billions of dollars worth of mortgage-backed securities that turned toxic when the housing market collapsed.

Among the 17 targeted by the lawsuits were Bank of America Corp., Citigroup Inc., JP Morgan Chase & Co. and Goldman Sachs.

The lawsuits were filed Friday by the Federal Housing Finance Agency, which oversees Fannie and Freddie, the two agencies that buy mortgages loans and mortgage securities issued by the lenders.

The total price tag for the securities bought by Fannie and Freddie affected by the lawsuits was $196 billion.

The government didn’t provide a dollar amount of how much it seeks in damages. It said that it wants to have the purchases of the securities canceled, be compensated for lost principal and interest payments and compensated for attorney fees and costs. The lawsuits allege the financial firms broke federal and state laws with the sales.

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