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U.S. plans new bank fraud cases in early 2014: attorney general

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[December 05, 2013]  WASHINGTON (Reuters)  The U.S. Justice Department plans to bring mortgage fraud cases against several financial institutions early in 2014, using as a template the case that ended last month in JPMorgan Chase & Co's $13 billion settlement, U.S. Attorney General Eric Holder said on Wednesday.

In an interview with Reuters, Holder would not say which companies or how many could face lawsuits but said the Justice Department was in contact with them and it was hard to say whether the talks would lead to settlements.

"We have a number of investigations that are coming to a head at the same time," he said. "It is my hope that the next round of these cases will be filed soon after the new year."

JPMorgan, the largest U.S. bank, agreed last month to pay $13 billion to end a series of government investigations into its marketing and sale of mortgage-backed securities.

That settlement included a $2 billion penalty to resolve civil fraud claims from the Justice Department and an acknowledgement from JPMorgan of problems in the securities it sold in the run-up to the financial crisis.

It also included $4 billion in help to consumers and did not cover an open criminal investigation into the conduct.

Holder said the government would seek similar elements in any future resolutions.

"Those four things I think comprise what we think of as a template for the resolution of these other matters as they're brought," he said.


The cases stem from a government task force the Obama administration created in early 2012 to probe the packaging and sale of shoddy home loans. At the time, the department sent subpoenas to more than a dozen financial institutions and warned of action.

Other institutions including Bank of America Corp, Citigroup Inc and Goldman Sachs Group Inc have disclosed related investigations and could face future lawsuits.

Bank of America is already contesting a lawsuit the Justice Department filed earlier this year over its mortgage securities, but expects more cases.

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In October it disclosed that staff at a U.S. Attorney's office intended to recommend a civil suit against Bank of America affiliates over mortgage securities. The bank also said staff at the New York Attorney General's office, which is part of the task force, planned to recommend action against Merrill Lynch, which the bank acquired in 2008.

Citigroup in November said it continues to respond to subpoenas and other requests for information about its mortgage securities from authorities including the Justice Department's civil division.

Goldman Sachs in its latest quarterly report said future claims from the task force could result in a "significant increase" in the company's liabilities. It said it continues to receive requests for information from members of the group.

Another bank, Credit Suisse, faced one of the first lawsuits stemming from the task force, filed by New York Attorney General Eric Schneiderman last November.

Representatives of Bank of America, Citigroup, Goldman and Credit Suisse either declined comment or did not immediately respond to requests for comment.

Holder said he was meeting with the head of the task force and its leaders on a weekly basis, including on Tuesday this week.

[By David Ingram and Aruna Viswanatha
2013 Thomson Reuters. All rights reserved.]

(Additional reporting by Karen Freifeld; editing by Howard Goller and Matthew Lewis)

Copyright 2013 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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