FHLB of San Francisco v. Deutsche Bank Securities

Federal Home Loan Bank of San Francisco Settles RMBS Claims Against Banks

On January 15, 2015, the Federal Home Loan Bank of San Francisco (FHLB) agreed to a $459 million settlement with various banks stemming from the sales of billions of dollars of RMBS.  FHLB originally filed the claims in the Superior Court of California, County of San Francisco in 2010 against Bank of America Corp., Credit Suisse Securities (USA) LLC, Countrywide Financial Inc., Deutsche Bank Securities, Inc. and other banks concerning 229 RMBS transactions.  FHLB alleged causes of action for violation of the Securities Act of 1933 and the California Corporate Securities Act as a result of dealers allegedly concealing information and lying about the quality of RMBS sold to FHLB.  It is unclear which banks are involved in the settlement.

FHLB-SF’s Securities Fraud Cases Remanded to State Court

In an Order issued December 20th, Federal District Judge Samuel Conti of the Northern District of California granted Plaintiff’s motions to remand FHLB of San Francisco v. Credit Suisse Securities, Inc. and FHLB of San Francisco v. Deutsche Bank Securities, Inc. to state court. The Court considered and rejected arguments that the FHLB-SF’s charter confers federal jurisdiction over actions brought by the Bank, as well as that the Bank is an agency of the United States and therefore should be in federal court. Although the Court accepted that federal jurisdiction could be properly predicated on the fact that bankrupt originators may owe indemnity to the Defendants, it declined to accept that jurisdiction and instead used its equitable powers to remand the case to state court. Decision.