The Obama Administration had a tough time forcing big banks into massive settlements without ever facing trial. So, it is worth giving attention to the executives of the U.S. division of Japanese bank Nomura who are unwilling to settle a similar case. In 2011, FHFA sued eighteen financial institutions including Nomura for allegedly misguiding The Federal Home Loan Mortgage Corp (OTCBB:FMCC) and Fannie Mae about the associated risks in mortgage-backed securities before the financial crisis.
The companies claimed that they were unwitting victims of the big banks. However, to support this story, the investors have to ignore the results of a bipartisan congressional inquiry that stated that it is Fannie Mae and The Federal Home Loan who did the misleading. It is also evident from separate lawsuits supporting the results of bipartisan congressional inquiry.
The regulators figured out that the big banks would try to avoid unpleasant publicity. The 17 financial institutions did cave and entered settlements to reach peace with the politicos. They knew that Fannie Mae and The Federal Home Loan were well acquainted with the fact that they were running risks at a time banks purchased mortgage-backed bonds. Still, the banks went for settlements as they wanted the crisis-era litigation to end.
Most of the big banks went for settlement except Nomura, which intends to figure out what happened to Fannie Mae and The Federal Home Loan. The trial date is fixed as March 16, 2015. Nomura willingness to approach the court is becoming a matter of concern for the government’s lawyers. The Feds dropped damage claims in January 2015. The government said that it could recover from the equitable claims in which bank would only be required to purchase the securities it sold to Mae and The Federal Home Loan. However, Nomura said that the claims for damages were lucrative part of the case.