A federal judge in Connecticut refused Monday to dismiss claims that WMC Mortgage Corp., a subsidiary of General Electric Co.’s financial services arm, misled investors about billions of dollars’ worth of mortgage-backed securities. A newcomer to MBS litigation, the judge recited various arguments the banks have raised in recent years and then rejected them one-by-one in unusually colorful fashion. He even quoted New York Times columnist Paul Krugman—never a good sign if you’re a financial institution—though it was his citations to a trio of Manhattan federal judges handling similar cases that ultimately sank the defense.
The claims were brought by two MBS trustees, Deutsche Bank National Trust Company and Law Debenture Trust Company of New York, which are represented by Steven Molo of MoloLamken and Harvey Wolkoff of Ropes & Gray, respectively. Jenner & Block is defending WMC.
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