Friday, September 30, 2011

Europeans are taking action on MBS disaster

From Reuters this morning:

JPMorgan Chase & Co and Bank of America Corp were hit with new lawsuits by investors seeking to recover losses on $4.5 billion of soured mortgage debt, expanding the litigation targeting the two largest U.S. banks.

Sealink Funding Ltd said between 2005 and 2007 it bought nearly $2.4 billion of residential mortgage-backed securities (RMBS) from JPMorgan and $1.6 billion from Bank of America in reliance on offering materials that were misleading about the quality of the underwriting and underlying loans. 
According to court papers, Sealink is an Irish entity that oversees RMBS purchased by special purchase vehicles once sponsored by SachsenLB.
Another plaintiff, Landesbank Baden-Wurttemberg, raised similar claims in a separate lawsuit against JPMorgan over $500 million of RMBS that it said it bought.

The plaintiffs seek compensatory and punitive damages.

Newsflash:  Everyone was thinking of American hedge funds taking the baseball bats to BAC and JPM, guess what, the European have finally figured out the game -- just so we are clear this is just the "tip of the Iceberg" once they get satisfaction in these cases, it is billions (With a B) that they will be claiming.

BAC will have few choices but to sell the rest of its assets and "call it a day".  It will take some months but the nails are hovering over the coffin!


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