Tags: FDIC | Mortgage | Securities | Banks

FDIC Sues Over Mortgage-Backed Securities Sold to Failed Banks

Monday, 21 May 2012 02:59 PM

The Federal Deposit Insurance Corp. sued a group of banks including JPMorgan Chase & Co., Citigroup Inc., Bank of America Securities and Deutsche Bank AG in two actions over mortgage-backed securities.

The FDIC, acting as receiver for two failed banks, filed the suits in New York federal court today seeking $77 million the banks allegedly lost on securities backed by residential mortgages.

The FDIC filed an $11 million claim as receiver for Strategic Capital Bank, a Champaign, Illinois, commercial bank that was closed by regulators in 2009. It filed a separate $66 million claim on behalf of Strategic Capital and Citizens National Bank.

The defendants misled investors in the registration statements for the securities, according to the FDIC.

The cases are Federal Deposit Insurance Corp. v. Bear Stearns Asset Backed Securities I LLC, 12-cv-4000; Federal Deposit Insurance Corp. v. J.P. Morgan Securities LLC, 12-cv- 4001, U.S. District Court, Southern District of New York (Manhattan).

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Monday, 21 May 2012 02:59 PM
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