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Deutsche Bank Settles Decade Long Texas Law Suit with FDIC Related to its Involvement in Impaired Loans Which Ultimately Created the Biggest Fraud and Financial Crisis in Recent History

The FDIC alleged that banks made untrue, misleading statements about the quality of the mortgage loans in order to sell billions worth of residential mortgage-backed securities to Guaranty Bank, which failed in 2009.

LIT COMMENTARY

Published; Dec. 23, 2019

Confirming LIT’s arguments, Deutsche Bank, the last hangout in a decade long Texas lawsuit by the FDIC, has settled, for a miniscule $150m – in effect, but not ‘legally’, accepting it knowingly sold toxic mortgages.

As the article below confirms, the US District Judge, an elderly and sick Sam Sparks (who should be retired), kept finding for Deutsche Bank right to the very end, most likely his decaying brain was still saying, ‘Deutsche Bank is too big to fail in Texas’.

Why would he say that, well just look at the data. Deutsche Bank has never lost a foreclosure case against a homeowner since the financial recession. It defies the facts of the settlement as discussed below, but when there is a corrupt judiciary, then that’s how it rolls in Texas courts.

p.s. If that news isn’t bad enough, LIT has also recently discovered that the “Chair” of the Commission for Lawyer Discipline is Ms. Noelle M. Reed, who, via her law firm, defended the Banks in this decade long case.

FDIC, Deutsche Bank $150M Settlement Stemmed From About a Decade of Litigation

Published; Dec. 10, 2019

The FDIC alleged that banks made untrue, misleading statements about the quality of the mortgage loans in order to sell billions worth of residential mortgage-backed securities to Guaranty Bank, which failed in 2009.

It’s been more than a decade since the 2008 financial crisis and housing market crash, yet one piece of resulting litigation over mortgage-backed securities only recently concluded with a meager $150 million settlement.

The Federal Deposit Insurance Corp., which was acting as a receiver for the defunct Guaranty Bank and Deutsche Bank Securities Inc., entered into the settlement to resolve a claim under the Texas Securities Act. The FDIC alleged the banks made untrue, misleading statements about the quality of the mortgage loans in order to sell billions worth of residential mortgage-backed securities to Guaranty Bank, which failed in 2009.

Houston litigation boutique Yetter Coleman announced Monday the settlement between the parties came on the night before jury selection was set to begin in late October in the U.S. District Court for the Western District of Texas. The court on Nov. 21 dismissed the case.

“It is among the best pro rata recoveries by the FDIC among its successful pursuit of various mortgage-backed securities cases around the country,” Yetter Coleman said in a statement.

The litigation has been pending since 2012. The amended petition in FDIC v. Deutsche Bank Securities alleged that Guaranty Bank paid nearly $2 billion for certificates of residential mortgage-backed securities, which were issued, underwritten or sold by the defendants.

The plaintiff claimed the defendants made untrue, misleading statements about the mortgage loans backing the securities Guaranty Bank had purchased.

In addition to Deutsche Bank, the other defendants were GMAC RFC Securities, Goldman, Sachs & Co., J.P. Morgan Securities, The Bear Stearns Companies Inc., and Structured Asset Mortgage Investments II Inc.

Because of earlier settlements, Deutsche Bank was the sole remaining defendant. Its settlement ends the litigation.

Earlier in the case, the parties tussled over how to calculate the damages.

In September 2017, Deutsche Bank scored a victory when U.S. District Judge Sam Sparks granted partial summary judgment that sided with how the bank argued that damages should be calculated.

Yetter Coleman partner Bryce Callahan, who represented the FDIC, wrote in an email that the settlement is a well-deserved recovery for his client.

“Going into trial, our client’s claimed damages were just over $200 million,” Callahan said. “This was a hard fought case, with great trial lawyers on both sides. Big settlements take time.”

Deutsche Bank’s attorney, Andrew Frankel, a partner in Simpson Thacher & Bartlett in New York, declined to comment.

Attorney Spotlight;

Noellee Reed, Skadden & Chair on Commission for Lawyer Discipline in Texas

Noelle M. Reed, chair, heads the Houston litigation practice for Skadden, Arps, Slate, Meagher & Flom. She has extensive experience representing clients in complex litigation in state and federal trial and appellate courts and arbitrations. She obtained her B.A. from Boston University in 1991 and her law degree from Harvard Law School in 1996.

Ms. Reed was a trial attorney with the Department of Justice’s Terrorism and Violent Crime Division and an assistant United States attorney in the Southern District of Texas. As a prosecutor, she handled criminal cases involving terrorism, public corruption, fraud, organized crime, drug trafficking, money laundering, environmental violations and tax offenses.

Notable client:

Bank of America mortgage backed securities litigation. Ms. Reed is lead counsel for Bank of America and its affiliates in litigation pending in federal and state courts in Texas.

Notable 5th Circuit Cases;

Fed. Deposit Ins. Corp. v. RBS Sec. Inc., 798 F.3d 244 (5th Cir. 2015) which included; Deutsche Bank Securities, Incorporated; Goldman Sachs & Company, Defendants–Appellees. Noelle M. Reed, Houston, TX, Andrew Tyler Frankel, Esq. (argued), Thomas C. Rice, Simpson, Thacher & Bartlett, L.L.P., New York, N.Y., Lisa A. Paulson, Shannon H. Ratliff, Ratliff Law Firm, Austin, TX, for Defendants–Appellees. 

JP Morgan Chase Bank, N.A. v. Datatreasury Corp., 823 F.3d 1006 (5th Cir. 2016) with Noelle M. Reed, Daniel Scott Mayerfeld, Skadden, Arps, Slate, Meagher & Flom, L.L.P., Houston, TX, Jennifer Haltom Doan, Esq., Haltom & Doan, Texarkana, TX, for Plaintiff, JP Morgan Chase.

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Laws In Texas is a blog about the Financial Crisis and how the banks and government are colluding against the citizens and homeowners of the State of Texas and relying on a system of #FakeDocs and post-crisis legal precedents, specially created by the Court of Appeals for the Fifth Circuit to foreclose on homeowners around this great State. We are not lawyers. We do not offer legal advice. We are citizens of the State of Texas who have spent a decade in the court system in Texas and have been party to during this period to the good, the bad and the very ugly.

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