Federal Home Loan Banks, Schwab Join Cambridge Place In Subprime Lawsuits

Nov 10 2010 | 4:08am ET

Cambridge Place Investment Management has a lot of company in suing Citigroup over its subprime mortgage-backed securities.

The banking giant on Friday said it was facing a number of lawsuits, including those filed by the Charles Schwab Corp and the Federal Home Loan Banks of Chicago and Indianapolis. Citi said the lawsuits were in "preliminary stages" and declined to estimate potential losses.

Those suing Citi—and several other large banks—allege that the bank misled investors about the subprime investments.

"The Wall Street banks conducted inadequate due diligence and failed to satisfy their own responsibilities," Cambridge Place alleged in a July lawsuit, facilitating an "environment of improper lending practices."

Cambridge Place has also sued Bank of America, Barclays, Credit Suisse Group, Deutsche Bank, Goldman Sachs, HSBC, Merrill Lynch, Morgan Stanley and UBS. It's not alone in suing them, either: The Federal Home Loan Bank of Chicago has also sued BofA, the bank said on Friday, and the Federal Home Loan Banks in Pittsburgh, San Francisco and Seattle have also filed lawsuits against banks.

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