Growing number of lawsuits against the major American banks

The US government has filed a lawsuit against "Bank of America" Corp., the second largest American bank in terms of assets, accusing it of having defrauded investors in a deal worth 850 million dollars with mortgage backed securities.

The US Justice Department and the regulator of the US securities market (SEC) have filed separate civil lawsuits with the Federal Court of North Carolina. The government claims that the bank has misled investors, underestimating the risk of the securities it sold them in 2008.

Officials of "Bank of America" are saying that the value of the shares in question fell heavily after the collapse of the real estate market in the US, which can not be blamed on the bank.

"Bank of America" said it would dispute the charges, stating that "These were prime mortgages sold to sophisticated investors who had ample access to the underlying data, and we will demonstrate that".

According to the Justice Department, the number of loans that defaulted after the deal of 2008 is "abnormally big" and cannot be justified only through the collapse of the real estate market. Furthermore, the American government claims that over 40% of the 1,191 securitized mortgage loans did not meet the internal standards of "Bank of America".

According to the charges being brought against the bank, it put heavy pressure on its employees to approve as many loans as possible, disregarding risk. The Justice Department also claims that the bank concealed the important risks associated with the mortgages underlying the securities. For example, the bank concealed the fact that 22% of the borrowers were self-employed, and 70% of them did not have their revenues validated by the bank.

"Bank of America" has set up provisions of over 42 billion dollars for special expenses, including litigation.

• "JPMorgan", "Goldman Sachs", "Glencore Xstrata" and LME, accused of manipulation

An American company is suing "JPMorgan Chase & Co.", the biggest bank in the US, investment bank "Goldman Sachs Group" Inc. and commodities trader "Glencore Xstrata" Plc of manipulating prices on the aluminum market, by hoarding significant stocks.

The complaint was filed by "Master Screens" Inc. of Florida.

The banks, together with the largest commodities trader in the world, of racketeering and conspiring with the London Metal Exchange, hoarding aluminum in Detroit-area warehouses and violating federal antitrust laws.

"By inserting itself into a healthy industry producing widely needed commodities, severely degrading functionality and widely distributing costs while itself benefiting, Goldman Sachs and JP Morgan couldn't fit a more archetypal description of a parasite on the markets", according to the Florida complaint.

The plaintiff also states that more than 1 million tons of aluminum are stored in the Detroit warehouses, many of which are owned by Goldman Sachs, which charges rent for the storage, according to the complaint, while LME load-out rules curtail how much of the metal leaves.

The officials of the two banks said that the lawsuit is "without merit", and Goldman Sachs said in an e-mail that "aluminum prices are down 40% from their peak in 2006."

This lawsuit was brought after, this month, "Superior Extrusion" of the US filed a lawsuit against "Goldman Sachs" and the London Metal Exchange alleging they are preventing aluminum deliveries and keeping the price of aluminum high, breaking the federal anti-trust law.

According to the case submitted by "Superior Extrusion" with the Federal Court of Detroit, "Goldman and the LME - through a series of interconnected agreements, it restricted the supply of 1.5 million tons of aluminum stored in the LME warehouses in Detroit, according to Superior Extrusion, causing delays in deliveries to customers that sometimes meant a lead-time of up to 16 months".

The plaintiff claims that some of the buyers in Michigan, Ohio, Illinois and other Midwest states have suffered losses due to the hiked prices.