Top of the News: Americans have waited in vain for prosecutions of the banksters for helping cause the Great Recession through their swindles, ooops, risky bets on exotic securities and derivatives. Now some simple justice may come from lawsuits filed by the Federal Home Loan Bank of Seattle.
According to the Wall Street Journal, the institution has filed 11 suits in King County Superior Court claiming that underwriters misled it about the quality of $4 billion of mortgage-backed securities it bought during the housing boom. The banks include Bear Stearns, now owned by JPMorgan Chase, Goldman Sachs, Morgan Stanley and Countrywide, now owned by Bank of America. It’s demanding that the banks buy back the securities plus interest.
The federally chartered FHLB is one of 12 such institutions set up by the government during the Depression and owned by more than 8,000 banks and thrifts, intended to provide stable credit, especially to savings and loans, and small, rural banks. The Seattle FHLB was badly wounded by Washington Mutual, which accounted for a third of its lending business.
The Seattle bank wants the cases moved to federal court, and they will be closely followed by wronged investors. Read the Journal story here (subscription may be required).
More