U.S. housing regulator paid law firms $373 million to sue banksPosted On: Jul. 17, 2015 12:00 AM CST
(Reuters) — The Federal Housing Finance Agency disclosed on Thursday that it paid two law firms over $373 million since 2010 to pursue litigation against several banks over mortgage-backed securities sold to Fannie Mae and Freddie Mac before the financial crisis.
The FHFA, which has acted as conservator for Fannie and Freddie since the government took them over in 2008, disclosed the sums in response to a Freedom of Information Act request by Reuters.
The disclosure marked the first time the FHFA had said how much it had paid Quinn Emanuel Urquhart & Sullivan L.L.P. and Kasowitz Benson Torres Friedman L.L.P.
The nearly $373.5 million amounted to less than 2% of the $18.7 billion obtained by the U.S. regulator through settlements and judgments against 16 banks, including $806 million after it took Nomura Holdings Inc. to trial.
An FHFA spokeswoman, said its hiring of private law firms “has been a prudent and measured expenditure of resources to recover losses incurred by Fannie Mae and Freddie Mac and the results have been positive for taxpayers.”
The disclosed fees represented amounts paid from 2010 through Feb. 6 of this year, when the FOIA was submitted.
The FHFA has likely paid much more than the $373.5 million since then due to the trial of Nomura, which along with an underwriter, Royal Bank of Scotland Group P.L.C., was accused of making false statements in the sale of $2 billion in mortgage-backed securities to Fannie and Freddie.
U.S. District Judge Denise Cote in Manhattan found the banks liable in May and ordered them to pay $806 million. Nomura is appealing.
That case was the first to reach trial of the 18 lawsuits the FHFA had filed in 2011 over some $200 billion in mortgage-backed securities that banks sold to Fannie Mae and Freddie Mac.
Before that, the FHFA obtained nearly $17.9 billion in settlements from institutions that include Bank of America Corp., JPMorgan Chase & Co. and Deutsche Bank AG.
The FHFA did not break down how much each firm earned. Quinn Emanuel handed 14 lawsuits, while Kasowitz Benson had four.
Quinn Emanuel, which has 700-plus lawyers, grossed $1.1 billion in 2014, according to trade publication The American Lawyer. Kasowitz Benson, a 337-lawyer firm, grossed $263 million that year, the magazine reported.