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Wachovia Says Corporates Knew MBS Risks

Filings in suit over U.S. Central losses show bank says corporates knew the risks of investing in mortgage-backed securities.

By Heather Anderson | Updated on April 09, 2012

In filing to dismiss its lawsuit alleging securities fraud, lawyers for Wachovia Capital Markets asked the NCUA a question that has haunted the regulator ever since the collapse of U.S. Central FCU: why didn’t the corporate more carefully consider the risks involved in purchasing $122 million worth of Alt-A backed MBS?

According to court documents filed April 4 in Kansas City, Wachovia, since purchased by Wells Fargo, contests NCUA’s claim that the MBS offering documents contained “untrue statements of material fact or omitted to state material facts” in violation of the federal Securities Act of 1933 and the Kansas Uniform Securities Act, and loan originators “systematically abandoned” disclosed underwriting guidelines.

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