FDIC Brings BNY Mellon to Court Over $2B in Failed Mortgages
US regulator FDIC sued BNY Mellon yesterday over $2B worth of residential mortgage-backed securities purchased by a failed Texas bank, stating BNY failed to protect its investors. The FDIC is acting on behalf of the now-defunct Guaranty Bank, which bought the securities back in 2005, putting investors $440M in the hole. By failing to ensure loan documents were not incomplete or defective, BNY shirked its duties to monitor the 12 trusts from Countrywide Home Loans and Bear Stearns’ EMC Mortgage, a breach of contract and a violation of both the NY Streit Act and federal Trust Indenture Act of 1939, the suit says. The FDIC had previously brought another Guaranty Bank suit against Goldman Sachs, Deutsche Bank and RBS over "significant losses" from an ill-advised $248M debt purchase—a case that was just revived this month by the Fifth Circuit appellate court after being dismissed by a district court. [360Law]
