One Bank Is Finally on Trial for the Financial Crisis

Wouldn’t you love to be on the jury?

Justice League

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

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2 thoughts on “One Bank Is Finally on Trial for the Financial Crisis

  1. The defendants’ 115-page pretrial memorandum is here .

    There is not a pretrial memorandum from the FHFA available online

    U.S. agency seeks $1.1 bln as Nomura, RBS face mortgage bond trial
    By Nate Raymond NEW YORK, March 16 Mon Mar 16, 2015 1:48pm EDT

    (Reuters) – A U.S. housing regulator urged a federal judge on Monday to award it $1.1 billion due to false claims made about “crap” mortgages underlying securities sold by Nomura Holdings Inc to Fannie Mae and Freddie Mac ahead of the 2008 financial crisis.

    At the start of a trial in Manhattan federal court, a lawyer for the Federal Housing Finance Agency said misrepresentations by Nomura and Royal Bank of Scotland Group Plc, an underwriter, about loans underlying $2 billion in securities exemplified broader misconduct by banks ahead of the crash.

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