[ by Melanie Gretchen ] The law firm that successfully reached an $8.5 billion settlement against Bank of America last June for its 22 large institutional clients and others - the deal's still tied up in court - now is targeting other large banks with similar legal strategies.  On instructions from these same clients, the lawyers now are pursuing Wells Fargo for some $19 billion in losses of soured investments. Houston-based law firm Gibbs & Bruns, which represents Pimco, the world's largest bond fund, among its 22 major institutional clients, reported that its clients had issued instructions to their respective trustees to open investigations into soured RMBS - residential mortgage backed securities - issued by affiliates of Wells Fargo in the lead-up to the financial crisis.  What gives these 22 investors so much clout is that they hold more than 25% of the voting rights in the 48 trusts that issued these RMBS. An Litigation Pattern Emerges. In mid-December, the law firm announced it was investigating yet, a 3rd large bank - JPMorgan Chase - over deficiencies in 243 of its RMBS trusts.  Again the firm represents these same institutional clients.  Following a proposed settlement, Kathy Patrick of Gibbs & Bruns explained the driving force behind multiple actions:

"Our clients continue to seek a comprehensive solution to the problems of ineligible mortgages in RMBS pools and deficient servicing of those loans.  Today's action is another step toward achieving that goal."

Opposition to Gibbs & Bruns. Yet, not everyone agrees with what or how Gibbs & Bruns is proceeding.  For example, there's opposition to the proposed settlement in state and federal courts over smaller investors who are getting shut out of an equitable payout, because they may not have been party to the broad agreement entered into by Gibbs & Bruns. Other legal observers question whether the Wells Fargo mortgage bond investigation is ,in fact, just another attempt by the law firm to extract a broad-based, watered down agreement that the large commercial bank would be apt to sign on to.  For example, several of the Wells RMBS transactions being investigated have very few losses and delinquencies - 2 of the delinquency rates are under 1%, and cumulative losses are under 1.34%. A third concern suggested by Isaac Gradman, an attorney who advises investors in mortgage-bond litigation, is the possibility that "the law firm is getting pushed by some of its clients to start enforcing putbacks and get as broad of a deal as possible."  Mr. Gradman added, "If they wrap up their holdings into a comprehensive deal, it may attract banks such as Wells Fargo to settle with them." For further details, go to [Reuters, 1/6/12].