U.S. banks offered deal over lawsuits: report

LONDON Tue Sep 6, 2011 1:04am EDT

A Bank of America sign is displayed outside a branch in Tucson, Arizona January 21, 2011. REUTERS/Joshua Lott

A Bank of America sign is displayed outside a branch in Tucson, Arizona January 21, 2011.

Credit: Reuters/Joshua Lott

LONDON (Reuters) - Big U.S. banks in talks with state prosecutors to settle claims of improper mortgage practices have been offered a deal that may limit their legal liabilities in return for a multibillion-dollar payment, the Financial Times reported on Tuesday.

The talks aim to settle allegations that banks including Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial, seized the homes of delinquent borrowers and broke state laws by employing so-called "robosigners," workers who signed off on foreclosure documents en masse without reviewing the paperwork.

The FT, citing five people with direct knowledge of the discussions, said state prosecutors have proposed settlement language in the "robosigning" cases that also might release the companies from legal liability for wrongful securitization practices.

A spokesman for Iowa Attorney General Tom Miller, who is leading states' negotiations with the banks, denied any deal has been offered on securitization.

"We do not intend to release any aspect of securitizations," said Geoff Greenwood, Miller's spokesman.

The banks are pressing for immunity from a raft of alleged civil violations and have called the latest proposal a "non-starter."

The two sides are due to meet again this week to iron out differences on any proposed deal, the article said.

(Reporting by Stephen Mangan in London and Dave Clarke in Washington D.C.; Additional reporting by Sakthi Prasad in Bangalore; Editing by Matt Driskill)

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Comments (14)
breezinthru wrote:
Someone who has achieved the rank of state Attorney General surely must question whether they can legally sell a citizen’s right to due process to the very corporations who illegally harmed that citizen.

In humble opinion, it sounds unconstitutional to me, but if the Attorneys General of all fifty states disagree with me, then I must be wrong.

However, if they answer that they can sell a citizen’s right to due process, then surely they must question whether they should.

Sep 05, 2011 12:30am EDT  --  Report as abuse
Underwood wrote:
Too big to fail; to big to prosecute? I don’t think so.

Sep 06, 2011 5:16am EDT  --  Report as abuse
Bartolo wrote:
This looks like a plea bargain to pay smaller fines for the robo-signing in order to get away with the vast, as yet uncharged fraud involving securitization.

Many workers saw their savings lost and state pension funds were looted by the actions of the large financial institutions. This sounds like a wink and a nod to the latter.

Sep 06, 2011 7:12am EDT  --  Report as abuse
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