Insurer Accuses US Bancorp Of $47M MBS 'Heist'

Law360, New York (March 18, 2011, 1:01 PM EDT) -- An insurance company sued U.S. Bancorp in Delaware on Tuesday, alleging the nation's fifth-largest commercial bank wrongfully invested in mortgage-backed securities that cost the insurer approximately $47 million, comparing the bank's actions to an old-fashioned stagecoach robbery.

In a complaint filed in the Delaware Court of Chancery, Woodmen of the World Life Insurance Society claims that affiliates of U.S. Bank NA, which acted as the custodian and trustee of a securities lending trust, pumped cash collateral obtained from borrowers into mortgage-backed securities that lost huge amounts...
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