The federal government is suing Deutsche Bank for $1 billion over shoddy mortgages that cost taxpayers hundreds of millions of dollars. The suit accuses the lender of lying to the government while arranging federal insurance on mortgages that it had recklessly approved for poor credit risks, reports the Los Angeles Times. Analysts believe the suit may mark the beginning of a major push to punish lenders for their role in the financial crisis.
"We go where the evidence takes us, and if it takes us to the larger players on Wall Street, so be it," the general counsel for the Housing and Urban Development Department tells Bloomberg, adding that it "would not be a fantastical stretch to think we are looking at other lending institutions as well." Deutsche Bank, whose stocks dove after the suit was filed yesterday, says it plans to "vigorously fight" the "unfair" allegations.