All Major U.S. Banks Face Tsunami Of Litigation For Investor Losses
Bank of America (BAC), Wells Fargo & Company (WFC), Citigroup (C) and JP Morgan Chase (JPM) are all facing an onslaught of consumer and investor lawsuits related to troubled mortgages, foreclosures and other things that could cause them to lose billions of dollars, as reported by the Wall Street Journal and Housing Wire. The forces behind this onslaught of claims putting pressure on the banks are everything from foreclosure litigation linked to robo-signing of documents to complaints over auction rate securities (ARS).
Bank of America, based in Charlotte, spent more than $1 billion in 2010 on legal and regulatory matters, according the filings with the Securities and Exchange Commission (SEC). It says that litigation and regulatory issues could cost the bank another $1.5 billion in 2011. Bank of America is still receiving requests from regulators for information on foreclosure protocols and mortgages, while at the same time is facing claims related to auction rate securities (ARS) sold to investors by Merrill Lynch prior to being acquired by BAC.
Wells Fargo reported seven class action suits and several other actions over the last few months related to foreclosure documents, according to the SEC. JP Morgan Chase has reportedly agreed to pay $25 million to settle with the New York Attorney General and other regulatory agencies for alleged securities violations related to the bank’s sale of auction rate securities (ARS). JP Morgan, the second largest U.S. bank, announced that it is “reasonably possible” that legal proceedings might cost as much as $4.5 billion in additional losses for which the firm hasn’t already set aside funds. JP Morgan also listed pending litigation brought by Deutsche Bank (DB) against the FDIC for mortgage securitization breaches that occurred when the FDIC took over the failed Washington Mutual (WAMU). Finally, Citigroup stands to lose upward of $4 billion in addition to money previously set aside for litigation and regulatory costs.
As the banks brace for losses, the regulators are proposing a $20 billion settlement.
If you have suffered losses from investing in auction rate securities (ARS) or other related actions caused by the possible wrongdoings of the nation’s largest banks, please contact our securities law firm for a confidential, no obligation consultation at 1-800-259-9010.