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RBS to hit back over US mortgages

The Royal Bank of Scotland (RBS) said it will "vigorously" defend itself against claims by the US government that it misrepresented the quality of mortgages sold during the housing bubble.

The Federal Housing Finance Agency (FHFA) filed lawsuits against 17 financial institutions, including Barclays Bank and RBS, in its role overseeing mortgage giants Fannie Mae and Freddie Mac.

Suits filed in New York or Connecticut allege violations in securities laws and common law in the sale of mortgage-backed securities to the two firms, which were said to have lost more than 30 billion dollars (£18.5 billion), partly because of their investments in sub-prime mortgages. The firms were bailed out by the US government.

Since the rescues, US taxpayers are said to have spent more than 140 billion dollars (£86.4 billion) to keep the firms afloat.

RBS said it has substantial defences to the claims.

A spokeswoman for RBS said: "We believe we have substantial and credible legal and factual defences to these claims and will defend them vigorously."

The complaints launched by FHFA seek damages and civil penalties under the Securities Act of 1933.

As "conservator" of Fannie Mae and Freddie Mac, FHFA is charged with preserving and conserving these companies' assets and does so on behalf of taxpayers.

FHFA said the complaints reflected its conclusion that some portion of the losses that Fannie Mae and Freddie Mac incurred on mortgage-backed securities "are attributable to misrepresentations and other improper actions by the firms and individuals named in these filings".

Other institutions in the list include Bank of America Corporation, Citigroup, Deutsche Bank, Goldman Sachs, HSBC North America Holdings, Morgan Stanley and Societe Generale.

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