Two units of Bank of America Corp. (BAC:US), the second-largest U.S. bank, were sued separately by two European banks over more than $900 million in mortgage backed securities the bank sold.
Landesbank Baden-Wurttemberg, Germany’s biggest state-owned lender, sued Countrywide Financial over $455 million in securities. Dexia SA (DEXB), based in Brussels, sued Merrill Lynch over $527 million in securities. Both suits were filed in New York State Supreme Court.
“The Countrywide defendants’ representations in the offering materials were recklessly or knowingly false when made, and caused plaintiffs to believe that the Countrywide RMBS that they purchased were safe investments,” the Stuttgart-based bank wrote in its suit.
Pools of home loans securitized into bonds were a central part of the housing bubble that, once burst, helped push the U.S. into the biggest recession since the 1930s. The market for mortgage-backed securities peaked at $2.3 trillion in 2007.
Dexia said in its suit that Merrill Lynch made similar misrepresentations concerning the securities the Belgian bank invested in.
Lawrence Grayson, a spokesman for Charlotte, North Carolina-based Bank of America, declined to comment on the suits.
The biggest U.S. bank is New York-based JPMorgan Chase & Co. (JPM:US)
The cases are is Landesbank Baden-Wurttemberg v. Countrywide Financial Corp., 651001/2012, and Dexia SA/NV v. Merrill Lynch & Co., 651000/2012, New York Supreme Court (Manhattan).
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