Chicago Policemen's Annuity & Benefit Fund accused Bank of America and U.S. Bancorp in a federal lawsuit of failing to protect investors in mortgage-backed securities.
The banks “regularly disregarded” their responsibilities as trustee for Washington Mutual mortgage bonds and caused millions of dollars in losses for investors, the $3 billion pension fund said in a complaint filed Wednesday in U.S. District Court in New York.
The banks knew that loans backing the securities didn't live up to their promised quality, that mortgage loan files were incomplete, and failed to take action to enforce WaMu's obligation to repurchase defective loans, according to the complaint.
The pension fund already is part of a separate federal class-action suit against Bank of New York Mellon over its role as trustee for investors in Countrywide Financial mortgage bonds.
Representatives of Bank of America and U.S. Bancorp didn't immediately respond to e-mails seeking comment. U.S. Bancorp succeeded Bank of America as trustee for the trusts at issue in the complaint, according to the court filing.