By Nate Raymond
NEW YORK Jan 23 General Electric Co has
agreed to settle a federal agency's lawsuit accusing it of
misleading Freddie Mac into buying $549 million of
mortgage-backed securities, the Federal Housing Finance Agency
said on Wednesday.
The settlement is the first from a series of lawsuits the
FHFA filed against Wall Street banks in 2011 in its role as
conservator for Fannie Mae and Freddie Mac.
The lawsuit against GE named subsidiaries including
financial services unit GE Capital. Terms of the accord were not
"This settlement resolves the dispute between FHFA and
GE consistent with FHFA's responsibilities as conservator of
Freddie Mac," Alfred Pollard, the agency's general counsel, said
in a statement. "FHFA is pleased this lawsuit has been resolved
and appreciates the work of Freddie Mac in this matter."
Russell Wilkerson, a spokesman for GE, declined comment.
The FHFA's lawsuits claimed that GE and 17 other financial
institutions were to blame for Fannie and Freddie's losses on
more than $200 billion in mortgage-backed securities.
The lawsuits are among the myriad cases filed since the 2008
financial crisis by investors, insurers and regulators against
banks that packaged home loans into securities. The lawsuits
generally have accused the banks of misrepresenting the quality
In the GE case, the FHFA accused the company of making
inaccurate statements in the offering materials for two
mortgage-backed securities sold to Freddie Mac in 2005.
The lawsuit has been pending in U.S. District Court in
Manhattan. A court filing Wednesday showed that the FHFA was
voluntarily dismissing the case.
The remaining defendants in the cases are awaiting a ruling
in the litigation by the 2nd U.S. Circuit Court of Appeals. The
appeals court is weighing whether to reverse a decision by U.S.
District Judge Denise Cote that allowed the FHFA's case against
UBS AG, a test case for the wider litigation, to
GE shares closed Wednesday down 7 cents at $21.94 on the New
York Stock Exchange.
The case is Federal Housing Finance Agency v. General
Electric Company, U.S. District Court, Southern District of New