The U.S. credit union regulator said on Wednesday it filed a lawsuit against U.S. Bank and Bank of America over mortgage securities sold in the years leading up to the financial crisis.
The National Credit Union Administration (NCUA) said the banks broke state and federal laws by failing their duties as trustees for 99 residential mortgage-backed securities trusts.
The banks sold $5.8 billion in securities to five corporate credit unions that later failed after the products lost value. The regulator accused U.S. Bank and Bank of America of knowing about defects in the mortgage loans but not providing required notices to the investors.
"U.S. Bank and Bank of America had obligations under federal and state law, and they failed to live up to those obligations," NCUA Chairman Debbie Matz said in a statement.
"Our legal efforts are aimed at promoting accountability within the financial system," she said.
Spokesmen for U.S. Bank and Bank of America declined to comment on the lawsuit.
U.S. regulators have been cracking down on banks for their behavior during the years leading to the 2007-2009 financial crisis, when mortgages went bad and investors in securities tied to those loans lost money.
The credit union regulator last year filed nine lawsuits against banks, including Morgan Stanley and Barclays, over mortgage securities sold to some of the same corporate credit unions.
Corporate credit unions are owned by and provide services to consumer-owned credit unions.
The complaint was filed in the U.S. District Court for the Southern District of New York.
