SOURCE: Paragon Financial Limited

Paragon Financial Limited

October 03, 2012 08:20 ET

Government Looks to Sue More Banks Following JPMorgan Lawsuit

The Paragon Report Provides Stock Research on Citigroup and Goldman

NEW YORK, NY--(Marketwire - Oct 3, 2012) - A day after New York Attorney General Eric Scheiderman sued the now-JPMorgan-owned Bear Stearns for fraud involving the creation and sale of mortgage-backed securities, the government has warned there will be more lawsuits to come. "There are more cases to come," Schneiderman said in a news conference. "We're investigating the misconduct of folks... that brought about the crash of 2008." The Paragon Report examines investing opportunities in the Banking Industry and provides equity research on Citigroup Inc. (NYSE: C) and Goldman Sachs Group, Inc. (NYSE: GS).
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This was the first lawsuit filed by President Obama's Residential Mortgage Backed Securities working group. The group, which was created in January, includes the Justice Department, the Securities and Exchange Commission, the New York Attorney General's Office, and the Federal Housing Association Inspector General.

The lawsuit says that Bear Sterns "systematically failed to fully evaluate the loans, largely ignored the defects... and kept investors in the dark about both the inadequacy of their review procedures and the defects in the underlying loans."

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Citigroup was recently upgraded by Keefe, Bruyette & Woods to outperform from market perform. KBW analysts cited they expect the bank to receive approval for capital deployment next year. Citigroup is scheduled to release their third quarter 2012 earnings on October 15, 2012.

A class-action lawsuit filed against Goldman Sachs Group over mortgage-backed securities was revived on appeal last month. U.S. District Judge Miriam Goldman Cedarbaum had previously dismissed the suit back in 2010, but a three-judge panel of the appeals court reversed that ruling on September 6, 2012.

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