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BofA, U.S. Bancorp sued for role as WaMu bond trustee
(Reuters) - Bank of America Corp (NYS: BAC - News) and U.S. Bancorp (NYS: USB - News) have been sued by a Chicago pension fund that said they failed to protect investors in their roles as trustees for mortgage-backed securities for Washington Mutual Inc.
Wednesday's complaint was filed eight days after U.S. District Judge William Pauley in Manhattan let four pension funds pursue similar claims against Bank of New York Mellon Corp (BK.N) over its role as trustee for Countrywide Financial Corp mortgage debt.
A lawyer whose firm represents investors in both cases has said she believed Pauley's "watershed" decision was the first to let mortgage-backed securities investors pursue claims against a trustee under the 1939 federal Trust Indenture Act.
In the latest case, also filed in Manhattan federal court, the Policemen's Annuity and Benefit Fund of the City of Chicago accused Bank of America and successor trustee U.S. Bancorp of causing millions of dollars of losses by failing to properly oversee 41 Washington Mutual trusts backed by home loans.
Saying it invested in six of those trusts, the fund accused both banks of failing to take possession of loan files or ensuring they were complete, or requiring Washington Mutual to fix or buy back defective loans.
Lawrence Grayson, a Bank of America spokesman, declined immediate comment, saying the bank was reviewing the complaint. U.S. Bancorp spokesman Thomas Joyce did not immediately respond to a request for comment.
The Chicago fund was also a plaintiff in the Bank of New York Mellon case. Pauley allowed bondholders to pursue claims that the bank did not properly advise them that Countrywide had defaulted on some obligations. He nonetheless said bondholders may sue only on the basis of trusts in which they invested.
Bank of America bought Countrywide in July 2008. Less than three months later, Washington Mutual failed, and most of its operations were bought by JPMorgan Chase & Co (NYS: JPM - News) in a transaction arranged by the FDIC.
The case is Policemen's Annuity and Benefit Fund of the City of Chicago v. Bank of America NA et al, U.S. District Court, Southern District of New York, No. 12-02865.
Some of the documents that were floating around during the crises were beyond belief , selling $200,000 dollar homes to people with no job for $1,000,000 and x'ing through any proof of income requirements ....
It's too bad banks have become such vultures and a detriment to society as a whole, or maybe they always have been ....
The central being the worst of them all...
Price discovery will happen eventually, each crises will be worse than the last until then IMO
"Successful trading is one long journey, not a destination" Peter Borish Former Head of Research for Paul Tudor Jones speaking on conversations with John F. Carter
