| NEW YORK, Sept 2
NEW YORK, Sept 2 A judge on Tuesday dismissed a
lawsuit by the Federal Deposit Insurance Corporation against
banks including Deutsche Bank AG and Credit Suisse
Group AG over mortgage-backed securities sold before
the 2008 financial crisis.
U.S. District Judge Louis Stanton in New York found the
FDIC's case, brought in its capacity as receiver for an Alabama
bank, was filed too late, citing a recent U.S. Supreme Court
A statute relied on by the banking regulator to bring this
and similar cases on behalf of banks it seized "did not give the
FDIC more time to bring claims that would otherwise have been
lost," Stanton wrote.
The ruling conflicted with a decision days earlier from
another judge in the same court who is presiding over similar
mortgage cases brought by the Federal Housing Finance Agency. It
could prompt a closely watched appeal if the FDIC seeks to
revive the case.
Other banks impacted by the ruling include Wells Fargo & Co
, Royal Bank of Scotland Group Plc and HSBC
A spokesman for the FDIC declined comment. Representatives
for the banks either declined comment or did not immediately
respond to requests for comment.
The FDIC filed the lawsuit in 2012, accusing the banks of
violating federal securities laws in connection with mortgage
bonds they issued or underwrote that were then bought for $388
million by Colonial Bank, an Alabama lender that failed in 2009.
Bank of America Corp, JPMorgan Chase & Co
and Citigroup settled with the FDIC as part of
multibillion-dollar global deals negotiated by the U.S.
Department of Justice.
The remaining banks sought dismissal of the case after the
Supreme Court in June issued a decision in an environmental
case, CTS v. Waldburger, that raised similar questions about the
timing of lawsuits.
The FDIC argued that a provision in the Financial
Institutions Reform, Recovery, and Enforcement Act (FIRREA)
extended the period of time in which it could bring a case on
behalf of a bank it seized.
The issue of whether U.S. regulators suing banks over
mortgage securities issued before the financial crisis can
pursue cases under such so-called extender statutes has divided
courts following the Supreme Court ruling.
On Thursday, U.S. District Judge Denise Cote in New York
found that a similar statute allowed the FHFA to pursue two
mortgage-backed securities lawsuits primarily targeting HSBC and
Nomura Holdings Inc.
Her ruling followed an Aug. 19 decision from the 10th U.S.
Circuit Court of Appeals in Denver finding that FIRREA allowed
the National Credit Union Administration to pursue cases against
banks including RBS, Nomura and Wells Fargo.
The FDIC, meanwhile, saw two other lawsuits against banks
including Goldman Sachs Group Inc and Bank of America's
Merrill Lynch dismissed last month by a federal judge in Texas
who said they were too late.
The case is Federal Deposit Insurance Corporation v. Chase
Mortgage Finance Corp, U.S. District Court, Southern District of
New York, No. 12-061666.
(Reporting by Nate Raymond in New York; Editing by Noeleen
Walder and Leslie Adler)