One Bank Is Finally on Trial for the Financial Crisis

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One Bank Is Finally on Trial for the Financial Crisis

One Bank Is Finally on Trial for the Financial Crisis

New Republic-

The trial of the century—a long-awaited determination of the damage perpetrated by Wall Street institutions in the financial crisis—began Monday in New York. But it’s only happening because one bank—unlike Goldman Sachs, JP Morgan, Citigroup, and Bank of America—refused to settle out of court. The Japanese firm Nomura stands accused of lying to mortgage giants Fannie Mae and Freddie Mac about the quality of mortgages pooled into securities during the housing bubble. The case will finally reveal hard data on just how much money Nomura, and the rest of the industry, made through fraud.

The Federal Housing Finance Agency (FHFA), conservator of Fannie Mae and Freddie Mac, sued 18 of the biggest banks in the world in 2011. As an investor, Fannie and Freddie purchased $196 billion in mortgage-backed securities from 2005 to 2007, filled with loans that did not meet specific underwriting guidelines. Sixteen of the 18 banks settled with FHFA, netting the agency $18.2 billion. One suit with the Royal Bank of Scotland remains in limbo. Only Nomura pushed FHFA into trial.1

[NEW REPUBLIC]

Nomura. Photographer: Kiyoshi Ota/Bloomberg

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2 Responses to “One Bank Is Finally on Trial for the Financial Crisis”

  1. keepon says:

    FHFA Trial Against Nomura, RBS Begins Monday Before Judge Cote

    by Charles Michael Link to post http://sdnyblog.com/

    The Federal Housing Finance Agency (or “FHFA,” as conservator for Fannie Mae and Freddie Mac) sued 18 banks in 2011 for misrepresenting the quality of mortgage bonds. All but Nomura and RBS have settled, for a total of around $18 billion. The trial against Nomura and RBS begins Monday before Judge Cote. It will be a bench trial.

    Coverage of the upcoming trial can be found from Reuters, American Lawyer ($), and Bloomberg.

    The defendants’ 115-page pretrial memorandum is here. There is not a pretrial memorandum from the FHFA available online.

    Our prior coverage of the FHFA cases is here

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