US TO SUE BANKS

02 Sep, 2011

US ‘to sue a dozen banks over housing bubble mortgages’

The New York Times has reported that the US is set to sue several high profile banks over mortgage misrepresentation, with the suits possibly being filed as early as this week.

It is expected that the Federal Housing Finance Agency will claim that the banks should have known the securities were not sound, the newspaper reported, adding that among those expected to be among the sued include Goldman Sachs, Bank of America and JPMorgan Chase, three of the most well-known banks in the US.

The Federal Housing Finance Agency claims the banks did not adequately check the mortgage security quality that they sold to investors prior to the financial crisis three years ago.

US mortgage giants, Fannie Mae and Freddie Mac had to be bailed out by the government after losing over $30bn (£18.5bn),with the deals in question holding some of the blame, although some experts argue that the losses were solely down to the state of the global financial system, according to the BBC.

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