Wall Street's worst kept secret is now out. From Reuters: "The United States sued Deutsche Bank AG, accusing the German bank and its MortgageIT Inc unit of repeatedly lying to be included in a federal program to select mortgages to be insured by the government." And so, 2011 continues being a carbon copy of 2010, with only Deutsche Bank taking the place of Goldman this time around. Oh yes, Greg Lipmmann we hardly knew ye (and we didn't even short your house).
In a civil complaint filed in the U.S. district court in Manhattan, the government said that defendants recklessly chose mortgages that violated program rules "in blatant disregard" of whether borrowers could make mortgage payments.
Deutsche Bank and MortgageIT profited from the resale of the mortgages, even as thousands of U.S. homeowners faced default and eviction, the complaint said.
The government said it has paid out hundreds of millions of dollars of insurance claims, and expects to pay out hundreds of millions more. Its seeks damages and penalties for violations of the federal False Claims Act.
Deutsche Bank did not immediately return a call seeking a comment