Nomura, RBS ‘crap’ emails come into play in $1 billion mortgage bond trial

NEW YORK (Reuters) – In 2007, a Royal Bank of Scotland Group Plcemployee emailed his boss with his view of a sample of mortgages underlying a bond that the bank was underwriting: “This one is crap.”

Asked about it this week in Manhattan federal court, Brian Farrell, the employee, said he did not recall the deal. But a U.S. regulator cited the email as evidence that Nomura Holdings Inc <8604.T> and RBS made false statements about mortgage securities they sold to Fannie Mae and Freddie Mac.

The email and others like it are part of a $1.1 billion lawsuit by the Federal Housing Finance Agency against Nomura and RBS that went to trial this month. The messages add to a litany of arguably embarrassing electronic musings by bank employees that have resurfaced in litigation over the 2008 financial crisis.

Private plaintiffs and U.S. regulators alike have seized upon internal emails from the likes of JPMorgan Chase & Co and Deutsche Bank AG calling the mortgage products they sold investors “lemons,” “junk,” and “pigs.”

Read on.

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