FDIC sues 12 banks over mortgage bonds sold to Colonial

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FDIC sues 12 banks over mortgage bonds sold to Colonial

FDIC sues 12 banks over mortgage bonds sold to Colonial

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The Federal Deposit Insurance Corp. sued 12 major banks Friday for selling allegedly faulty mortgage bonds to defunct Colonial Bank.

Montgomery, Ala.-based Colonial failed in August 2009 with more than $25 billion in assets after bad bets on housing and a lending scandal tied to now shuttered Taylor Bean & Whitaker. At the time, the FDIC estimated the failure would cost the insurance fund $2.8 billion.

The banks that sold the $388 million in allegedly problematic mortgage-backed securities to Colonial include:

JPMorgan Chase; Citigroup; Wells Fargo; Merrill Lynch; Deutsche Bank; Credit Suisse; UBS; HSBC; FTN Financial; Royal Bank of Scotland; Ally Financial; and First Horizon.

[HOUSING WIRE]

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