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New York sues Credit Suisse over mortgage securities

 The state of New York sued Credit Suisse for fraud Tuesday over the sale of questionable mortgage securities that dealt buyers $11.2 billion in losses in the US housing meltdown.

Following a similar suit against JPMorgan Chase in October, New York Attorney General Eric Schneiderman said the Swiss bank deceived investors over the quality of residential mortgage-backed securities (RMBS) that it sold in 2006 and 2007.

The suit said that the bank knew that the RMBS it was selling as quality investments were full of high-risk, subprime home loans that the bank’s own traders branded “garbage.”

Moreover, Credit Suisse extended financing to the originators of the bad loans which it packaged into RMBS for sale.

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