MBIA says Credit Suisse hid crucial documents in U.S. mortgage case

Mon Jun 23, 2014 5:33pm EDT
 
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By Jonathan Stempel

NEW YORK (Reuters) - Credit Suisse Group AG CSGN.VX has withheld many key documents from MBIA Inc (MBI.N: Quote) in a lawsuit accusing the Swiss bank of lying about how it processed loans used in mortgage-backed securities, and it should be ordered to review whether it has more evidence suggesting misconduct, the bond insurer said.

In a filing in New York state court on Monday, MBIA objected to what it called Credit Suisse's failure to turn over "some of the hottest documents" in the 4-1/2-year-old lawsuit, on the ground that they were "non-responsive."

MBIA, based in Armonk, New York, said it learned of the documents only in the last few months, after a court told Credit Suisse to turn over deposition transcripts from other U.S. cases involving similar claims.

Credit Suisse spokesman Drew Benson declined to comment.

The dispute stemmed from a December 2009 lawsuit in which MBIA accused Credit Suisse of fraudulently deceiving it into participating in a mortgage-backed securities transaction that quickly soured, causing the insurer to pay more than $296 million in claims.

Credit Suisse has said the lawsuit lacks merit.

Monday's filings included more than 500 pages of exhibits that MBIA said may support its claim that Credit Suisse hid defects in securitization practices before the financial crisis, reflecting the bank's desire to sell more securities rather than honor its stated policies. Many banks have faced similar claims.

Among the exhibits is an Aug. 21, 2007, email in which a Credit Suisse due diligence official referred to "some terrible decisions or missed calls, magnified by very bad feedback" in a bank business that handled underwriting and due diligence.   Continued...

 
The logo of Swiss bank Credit Suisse is seen below the Swiss national flag at a building in the Federal Square in Bern May 15, 2014.  REUTERS/Ruben Sprich