Federal judge holds 2 banks accountable for selling U.S. fraudulent mortgages

RBS and Nomura fraudulently sold bad mortgages to the U.S., a federal judge has found
(Image credit: Peter Macdiarmid/Getty Images)

On Monday, U.S. District Judge Denise Cote ruled that two banks — Japan's Nomura Holdings and Britain's Royal Bank of Scotland — fraudulently sold faulty mortgages to Freddie Mac and Fannie Mae leading up to the 2008 housing crash. "The magnitude of falsity, conservatively measured, is enormous," Cote wrote in what The New Times calls her "scathing 361-page decision."

Nomura and RBS were the only two of 18 large banks that didn't settle with the Federal Housing Finance Agency; the other 16 avoided airing their presumably dirty laundry in court by collectively paying almost $18 billion in penalties. In the jury-less trial, Coat heard evidence that two-thirds of the mortgages RBS and Nomura packaged into securities had underwriting defects. The FHFA is expected to ask for $500 million in compensation. Namura says it will appeal the ruling.

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Peter Weber, The Week US

Peter has worked as a news and culture writer and editor at The Week since the site's launch in 2008. He covers politics, world affairs, religion and cultural currents. His journalism career began as a copy editor at a financial newswire and has included editorial positions at The New York Times Magazine, Facts on File, and Oregon State University.