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Opened and Closed . . . And Opened Again

A handful of banks may find themselves in court again in the near future, as a federal judge has given the Federal Deposit Insurance Corporation (FDIC) the go-ahead to attempt to reopen a case previously dismissed at the end of last September if it could prove it still had legal standing to sue.

U.S. District Judge Andrew Carter issued a statement on Tuesday informing the FDIC it could petition the court to reopen cases against Citigroup Inc, Bank of New York Mellon Corp, and U.S. Bancorp as an attempt to recoup losses on mortgage debt amounting to more than $695 million.

The FDIC, in the past lawsuit, accused the banks of not monitoring the underwriting and servicing of mortgage-backed securities owned by Austin-based Guaranty Bank, which closed its doors in 2009. The securities in question were issued between 2005 and 2007, and added up to $2.7 billion. The FDIC thinks the bank’s failure will cost the deposit insurance fund $3 billion. Judge Carter gave the FDIC 90 days to file their petition.

Last September, Judge Carter dismissed the case on the grounds that legal claims were transferred with the bonds when they were purchased in March 2010 via a resecuritization transaction, even though the FDIC argued they claim for was a personal matter. Judge Carter has since amended his ruling.

Neither the FDIC, or any of the banks in question have commented on the Judge’s ruling.

For more information, the cases in the U.S. District Court, Southern District of New York are listed as the following: FDIC v. The Bank of New York Mellon, No. 15-06560; FDIC v. U.S. Bank NA, No. 15-06570; and FDIC v. Citibank NA, No. 15-06574.

About Author: Joey Pizzolato

Joey Pizzolato is the Online Editor of DS News and MReport. He is a graduate of Spalding University, where he holds a holds an MFA in Writing as well as DePaul University, where he received a B.A. in English. His fiction and nonfiction have been published in a variety of print and online journals and magazines. To contact Pizzolato, email [email protected].
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