The agency that oversees United States mortgage markets is reported to be preparing to file suit against more than a dozen big banks.
The New York Times reports the banks will be accused of misrepresenting the quality of mortgages they packaged and sold during the housing bubble.
The Federal Housing Finance Agency, which oversees mortgage companies Fannie Mae and Freddie Mac, is expected to file suit against Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, among others.
The suits - stemming from subpoenas the finance agency issued to banks last year - could be filed by Tuesday.
The government will argue the banks, which pooled the mortgages and sold them as securities to investors, failed to perform due diligence required under securities law and missed evidence that borrowers' incomes were falsified or inflated, the newspaper reports.
Fannie Mae and Freddie Mac lost more than $US30 billion, partly because of their purchases of mortgage-backed securities, when the housing bubble burst in late 2008. Those losses were covered mostly with taxpayers' money.
The practice of subprime lending, wherein mortgage brokers lowered their standards to entice homebuyers to take out large mortgages to buy more expensive homes than they could afford, was a root cause of the mortgage market implosion, Reuters reports.