NEW YORK ( TheStreet) -- Germany's inevitable bailout of Europe may be partially funded with money won in U.S. courts against big U.S. banks.
Reuters reported on Wednesday that IKB Deutsche Industriebank AG sued Citigroup (C) for making "material misrepresentations" related to $137.4 million in mortgage-backed securities, while separately suing Goldman Sachs (GS), over $73.2 billion in MBS. IKB claimed it took losses when selling the securities.
Also on Wednesday, Reuters reported that UBS AG (UBS) sued Sealink Funding Ltd. over $158.1 million in MBS.
This is just the latest German bank to sue their U.S. counterparts. Many of Germany's government-backed "Landesbanks" have suffered major losses as a result of bets on the U.S. housing market made prior to the financial crisis."Certainly a lot of major investors were German enterprises and there's a certain amount of follow the leader going on now too," says Donald Hawthorne -- a partner in the Litigation and Regulatory Group of Axinn, Veltrop & Harkrider LLP. "It is a good opportunity for these companies, as these claims are a wasting asset." A steady stream of similar German bank lawsuits -- also filed in New York State Supreme Court -- against issuers of mortgage-backed securities, including (but certainly not limited to):
- A suit in February brought by DZ Bank AG -- Germany's fourth largest bank -- against JPMorgan Chase (JPM), saying that it purchased $85 million in MBS from JPMorgan based on flawed offering materials, and another suit by DZ Bank against HSBC (HBC), claiming misrepresentations and omissions in offering materials, on $122 million in MBS purchases.
- A suit by brought in April by HSH Nordbank AG against two subsidiaries of Barclays PLC (BCS), claiming Barclays misrepresented the quality of loans underlying $46 million in mortgage-backed securities.
- An April lawsuit by Bayerische Landesbank -- one of eight German Landesbanks that are primarily owned by German state governments -- against Deutsche Bank AG (DB), accusing Deutsche Bank of committing fraud while selling $810 million in residential MBS.
- A lawsuit filed in May by Bayerische Landesbank against Merrill Lynch -- acquired by Bank of America (BAC) in January 2009 -- accusing Merrill of making misrepresentations in offering materials for $324 million in residential MBS.
- Separate suits filed against Barclays in June by Sealink Funding and Landesbank Baden-Wuerttemberg Sealink claiming that Barclays made misrepresentations related to the sale of $604 million in MBS, while Landesbank Baden-Wuerttemberg claimed misrepresentations on $205 million in mortgage paper.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV