The House Committee on Oversight and Government Reform, as part of its ongoing monitoring of the Federal Housing Finance Agency (“FHFA”), is investigating the cost to the government of numerous lawsuits against financial institutions brought on behalf of Fannie Mae and Freddie Mac by Quinn Emanuel and Kasowitz Benson. In a September 29, 2011 letter to the Acting Director of the FHFA, Rep. Darrell Issa (R-Cal.), Chairman of the committee, requested detailed information about the FHFA’s decision-making process in selecting counsel, the terms of the representation agreements with each firm, the expected value of the lawsuits, and the expected cost of the representations. Rep. Issa requested an explanation of the FHFA’s decision to use private law firms instead of government lawyers and also requested copies of all RMBS-related communications between the FHFA and the Department of Justice or other government agencies. Rep. Issa asked the FHFA to respond by October 13. Letter.
Quinn Emanuel
Allstate Sues Merrill Lynch and Credit Suisse for Fraud
On February 28, 2011, Allstate Insurance, represented by Quinn Emanuel, filed complaints against Merrill Lynch and Credit Suisse affiliated entities in New York state court in connection with Allstate’s purchase of RMBS from those entities. The complaints follow similar complaints by Allstate against JP Morgan, Washington Mutual, Bear Stearns, Citigroup, and Deutsche Bank entities. The complaints allege that defendants fraudulently misrepresented the quality of the loans underlying the RMBS they underwrote and sold to plaintiff. Both complaints allege causes of action for common law fraud, fraudulent inducement, and negligent misrepresentation. The complaint against Merrill Lynch also adds claims for violations of Sections 11, 12(a)(2), and 15 of the ’33 Act. Allstate purchased over $167 million in RMBS from Merrill Lynch and over $231 million from Credit Suisse. CS Complaint. Merrill Complaint.
Allstate Sues JP Morgan, WaMu and Bear Stearns Over Sale of RMBS
On February 16, 2011, several Allstate Insurance entities filed a complaint against a number of JP Morgan, Washington Mutual and Bear Stearns entities and certain Washington Mutual directors and officers in the Southern District of New York. Plaintiffs allege that defendants misrepresented the quality of the loans underlying over $757 million in RMBS they sold to Allstate. Allstate is represented by the Quinn Emanuel firm. Complaint.
Massachusetts Mutual Sues Deutsche Bank Over $125 Million in RMBS
On February 16, 2011, Massachusetts Mutual Life Insurance Company filed a complaint in the Massachusetts federal District Court alleging that various Deutsche Bank entities and certain of their officers violated Massachusetts’s blue sky laws by misrepresenting characteristics of the loans backing $125 million in RMBS sold to Massachusetts Mutual in 11 different offerings. Massachusetts Mutual alleges that it lacked access to the loan files, making the defendants its exclusive source of information regarding the loans. Massachusetts Mutual is represented by the Quinn Emanuel firm. Complaint.