Bank of America Corp (NYSE:BAC) and US Bancorp have won a dismissal of lawsuits that were filed by mutual funds and investment companies, after the former was accused of crossing the red lines in their duties and responsibilities as trustees for residential mortgage-backed securities that have taken a hit in the international financial meltdown. The U.S. District Judge, Katherine Forrest, in Manhattan, announced the decision on three counts.
Judge Forrest had rejected attempts by Blackrock Inc., Allianz SE's Pacific Investment Management, and TIAA-CREF, to hold US BANCORP liable for the 843 residential mortgage backed securities (RMBS) trusts that were collateralized at a total of less than 780 billion dollars of loans.
Forrest explained in her judgment that the funds pleading did not carry much weight, and that she does not have jurisdiction to cover the other 810 trusts, especially in the light of last year’s verdict issued by the federal appeal court that concerns the Bank of New York Mellon Corp.
In a separate second case, the judge stated that the National Credit Union Administration did not possess the framework to take a stand against US Bancorp or the Bank of America over 74 RMBS trusts in which over five corporate credit unions, which purchased the certificates, failed in the end.
In the third and final case, Forrest shrugged off the claims by Irish and Cayman Islands based entities against the two banking giants, as they lack strong standing. Despite that, the judge says that all the plaintiffs can appeal or amend their complaints.
While that may be good news for the Charlotte-based banking group, the news has not been so encouraging on the other front, with Bank of America Corp pleading guilty to forex rigging allegations, along with other US banking giants. The bank has been fined more than $200 million.
According to the regulator, the Securities and Exchange Commission, Bank of America had deficiencies that had prevented it from detecting and addressing the conduct of its traders from 2010 to 2013. It also failed to detect possible disclosures of highly confidential information of its customers being leaked to other banks.
The reason why Bank of America is partially off the hook or is being fined lower is that traders in that company reached illegal agreements at that time, which the bank may had known discreetly. The bank holding company says it is improving its deficiencies but informs that it still has a long way to go.
Bank of America stock price ended the day at $16.75, a gain of 0.15% the previous day.
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