[ by Howard Haykin ]

[We begin with some background info, though most lf it is C-I commentary.]

So, what ever became of those $200 billion lawsuits against the big banks that were filed in 2011?  Apparently, they went into hibernation and look like they're poised to come out roaring this spring. 

You probably recall the farcical or folly nature of the lawsuits filed by the Federal Housing Finance Agency ("FHFA") - which is a guardian angel for the quasi-governmental agencies, Fannie Mae and Freddie Mac.  All told, FHFA filed 18 lawsuits against big banks and financial institutions for misleading the 2 government institutions about the quality of mortgage-backed securities these dealers passed along to Fannie Mae and Freddie Mac.  

What leads me to refer to the lawsuits as farcical or pure folly, is that this pair of quasi-government agencies had amply demonstrated the incompetence and negligence of their senior executives in dealing with acquiring mortgage-backed securities.  They were fully capable to acquiring distressed mortgage-backs on their own - with or without the alleged assistance of misleading advice from banks and financial institutions.

Nevertheless, General Electric Company became the ......   the first defendant to settle - just last week, on 1/23/13.  Terms were not disclosed.

Two other lawsuits are ... WELL, LET’S STOP HERE AND SEE WHAT REUTERS HAD TO SAY.

Reuters provides the following details on all 18 cases:   Together, the lawsuits accuse banks and other financial institutions of misrepresentations that led to losses on more than $200 billion in mortgage-backed securities.  Defendants deny the accusations.

• The lawsuits generally allege violations of both federal and state securities law.

• U.S. District Judge Denise Cote in New York was appointed to oversee 16 of the lawsuits.  Those cases are against:
  • UBS AG  ...  Ally Financial Inc  ... Bank of America Corp.  ...  Merrill Lynch & Co unit  ... Barclays Bank Plc  ... Citigroup Inc  ... Credit Suisse Group AG  ... Deutsche Bank AG  ... First Horizon National Corp  ... Goldman Sachs Group Inc  ... HSBC Bank Plc;  ... JPMorgan Chase & Co  ...  Morgan Stanley  ... Nomura Holdings Inc  ... Societe Generale  ... General Electric Co.

• General Electric Co on Jan. 23 became the first defendant to settle, a goal Judge Cote has encouraged.

• Two other lawsuits are before other judges: (i) A lawsuit against BofA's Countywide Financial Corp unit was transferred to U.S. District Judge Mariana Pfaelzer in L.A., CA,; (ii) case against RBS Group PLC is pending before U.S. District Judge Alvin Thompson in New Haven, CT.

• The UBS case was the first one filed. The 2nd U.S. Circuit Court of Appeals is considering whether to reverse Cote's ruling allowing the case to move forward.  The UBS trial has been set for 1/13/14.

• Besides the banks, 131 individuals are also defendants in the lawsuits.

• Judge Cote also scheduled 6/2/14 trial dates in the JPMorgan and Merrill cases.

For further details, go to:  [Reuters, 1/28/13].