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U.S. goes to court over Deutsche Bank home loans

Marketplace Staff May 3, 2011
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U.S. goes to court over Deutsche Bank home loans

Marketplace Staff May 3, 2011
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STEVE CHIOTAKIS: In a little more than an hour, the Justice Department will outline the charges it’s brought against Deutsche Bank and its mortgage subsidiary. The U.S. today filed suit against the giant German bank for making a ton of money from knowingly lending money to people who were unable to pay it back.

Courtney Comstock is with Business Insider and she’s with us from New York. Good morning.

COURTNEY COMSTOCK: Good morning.

CHIOTAKIS: What kind of allegations are we talking about here?

COMSTOCK: We’re talking about allegations that Deutsche Bank lied to a government-funded program that would put their money behind mortgages. And what the government is saying is that Deutsche Bank just stamped their approval on these mortgages and sent them to the government in order for the government to back them without making sure that the lenders could pay back the mortgages. And now the government is suing them for $1 billion because they are left with all of these mortgages that the lenders just couldn’t pay them — Deutsche Bank did no due diligence they say. And the government’s left — you know — with a big black hole of debt and they hope that Deutsche Bank’s $1 billion will pay it.

CHIOTAKIS: How has Deutsche Bank responded to these charges?

COMSTOCK: They — I think they were a little blindsided by it because all that we’ve heard — the comment that we’re getting out of Deutsche Bank is that they’ve seen the charges, and they’re reviewing them. So they haven’t made a comment yet. And we’ll just have to wait to see what that will be.

CHIOTAKIS: I’m curious Courtney, does this extend farther than just Deutche Bank, or do U.S. attorneys have their eyes on other banks and lenders too?

COMSTOCK: It’s hard to tell, but after Goldman Sachs, it seems like Deutsche Bank was the next most egregious and how they handled the mortgage crisis. And so I would suspect that they’re just going down the line and somebody will be next.

CHIOTAKIS: Courtney Comstock with Business Insider in New York. Courtney thanks.

COMSTOCK: Oh yeah sure. Thank you.

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