By Nate Raymond
NEW YORK, July 19 (Reuters) - Fourteen major banks sued bythe Federal Housing Finance Agency over soured mortgageinvestments have lost a bid to have a U.S. appeals courtintervene in their cases based on what they called a judge's"gravely prejudicial" rulings.
In a brief order on Friday, the 2nd U.S. Circuit Court ofAppeals in New York denied the banks' petition, saying they hadnot demonstrated they "lack an adequate, alternative means ofobtaining the relief they seek."
The banks had jointly in March filed what is called amandamus petition, complaining that U.S. District Judge DeniseCote in Manhattan had systematically deprived them of evidenceneeded to fight the FHFA's lawsuits.
The banks, which include UBS AG, JPMorgan Chase &Co and Bank of America Corp, also said the judgehad issued rulings that sought to force them to settle.
The banks asked the 2nd Circuit to reverse rulings by Coteand allow them to gain more access to information about FannieMae and Freddie Mac.
The FHFA regulates Fannie and Freddie after the two mortgagefinance companies were placed into federal conservatorship atthe height of the 2008 financial crisis.
The filing, unusual in its targeted critique of a federaljudge, was a sign of how serious the litigation had become forthe banks.
The FHFA sued 18 banks in 2011, accusing them of violatingsecurities laws by misleading Fannie and Freddie about $200billion in mortgage-backed securities they purchased.
Sixteen of those lawsuits were transferred in December 2011to Cote, a former federal prosecutor who recently ruled againstApple Inc in an antitrust case over ebooks brought by the U.S.Justice Department.
In the year and a half since, Cote has become a majorinfluence in the direction of the litigation, denying motions todismiss the lawsuits and limiting depositions and documentdiscovery.
The banks, which also include Barclays PLC, GoldmanSachs Group Inc and Deutsche Bank AG, in theirpetition to the 2nd Circuit called the judge's approach"one-sided."
"The rulings prejudge facts a jury should decide based on afull evidentiary record," the banks said.
The rulings so far have meant banks "are being forced toproceed under a series of gravely prejudicial rulings, someaimed at pressuring petitioners to settle," the petition said.
The appeals court denied the petition on Friday.
Cote has set a quick trial schedule. UBS is set to go totrial first, in January 2014.
Two defendants who were before Cote, General Electric Co andCitigroup Inc, have settled so far. Terms were confidential.
The mandamus petition was not the first trip for the FHFAcases to the 2nd Circuit. In April, a different appellate panelupheld Cote's decision not to dismiss the case against UBS, in aruling that would apply to the 13 other cases remaining beforeher, as well as one in Connecticut.
Banks other than UBS on Monday sought permission tointervene in order to appeal the dismissal decision to the U.S.Supreme Court, citing the "substantial risk" the UBS case mightsettle before the high court could rule.
Other banks that were part of the mandamus petition to the2nd Circuit were First Horizon National Corp, NomuraHoldings Inc, Societe Generale, Morgan Stanley, AllyFinancial Inc, Royal Bank of Scotland Group and Credit Suisse Group AG.
Representatives for the banks and FHFA either declinedcomment or did not immediately respond to requests for comment.
The case is In re FHFA Coordinated Securities Litigation,2nd U.S. Circuit Court of Appeals, No. 13-1122.