Credit Suisse Finalizes $5.3 Billion Mortgage Deal with US

CNBC | January 18, 2017         Credit Suisse formally agreed to pay $5.3 billion to settle with U.S. authorities over claims it misled investors in residential mortgage-backed securities it sold in the run-up to the 2008 financial crisis, the U.S. Department of Justice said on Wednesday.

Zurich-based Credit Suisse will pay a $2.48 billion cash penalty and provide $2.8 billion in consumer relief, including loan forgiveness and financing for affordable housing, the Justice Department said in a statement.

"The bank concedes that it knew it was peddling investments that were likely to fail," Principal Associate Attorney General Bill Baer said in the statement.

Credit Suisse, which had announced the agreement in principle on Dec. 23, said in a statement it was "pleased to have reached an amicable settlement that allows the bank to put this legacy matter behind it."

Shares of Credit Suisse on the Swiss stock exchange closed down 2.5 percent at 15.28 Swiss francs, a steeper drop than the broader European banking sector.

In a statement of facts, Credit Suisse acknowledged it knew the loans it pooled into securities did not meet underwriting guidelines.  Read more here.

 

JPMorgan Agrees to $55 Million Settlement of Mortgage Discrimination Complaint: Source

Reuters | January 18, 2017          JPMorgan Chase & Co has agreed to pay $55 million to settle a U.S. Justice Department lawsuit accusing it of discriminating against minority borrowers by allowing mortgage brokers to charge them more for home loans, a person familiar with the matter said on Wednesday.

The U.S. Justice Department complaint, filed in Manhattan federal court on Wednesday, accused the bank of willfully violating the U.S. Fair Housing Act and the Equal Credit Opportunity Act between 2006 and 2009 and showing "reckless disregard" for the rights of at least 53,000 African-American and Hispanic borrowers.

"We’ve agreed to settle these legacy allegations that relate to pricing set by independent brokers," JPMorgan spokeswoman Elizabeth Seymour said. "We deny any wrongdoing and remain committed to providing equal access to credit."

A spokeswoman for U.S. Attorney Preet Bharara had no immediate comment.

The alleged discrimination involved so-called wholesale loans that were made through mortgage brokers the bank used to help originate loans, the complaint said. Chase allowed brokers to change rates charged for loans from those initially set based on objective credit-related factors, the complaint said.   Read more here.

Deutsche Bank and Justice Dept. Complete Deal on Mortgage Crisis

The New York Times |  January 17, 2017        The Justice Department completed a deal with Deutsche Bank on Tuesday that will require the bank to pay $7.2 billion for its sale of toxic mortgage securities in the run-up to the 2008 financial crisis, the department said.

The settlement calls on Deutsche Bank to pay a civil penalty of $3.1 billion and provide $4.1 billion in consumer relief to homeowners, borrowers and communities harmed by its practices.

The total is the largest amount ever paid to resolve charges against a single entity for misleading investors in residential mortgage-backed securities, the department said in a statement.  Read more here.

Deutsche Bank to Fight $14 Billion Demand From U.S. Authorities

Deutsche Bank shares tumble on U.S. fine

Reuters | September 16, 2016         Deutsche Bank (DBKGn.DE) said it would fight a $14 billion demand from the U.S. Department of Justice to settle claims it missold mortgage-backed securities, a shock bill that raises questions about the future of Germany's largest lender.

The claim against Deutsche, which is likely to trigger several months of talks, far exceeds the bank's expectations that the DoJ would be looking for a figure of only up to 3 billion euros ($3.4 billion).

The demand adds to the problems facing Deutsche Bank's Chief Executive John Cryan, a Briton who has been in the job for a year.

The bank only scraped through European stress tests in July and has warned it may need deeper cost cuts to turn itself around after revenue fell sharply in the second quarter due to challenging markets and low interest rates.

Deutsche Bank shares, which have lost around half their value this year, tumbled 7.6 percent to 12.10 euros in Frankfurt on Friday, with analysts saying the bank may need to raise fresh funds from investors or sell assets to shore up its capital ratios.

The cost of insuring Deutsche Bank debt against default rose by around eight percent.

The bank, which employs around 100,000 people, said it regarded the DoJ demand as an opening shot.

"Deutsche Bank has no intent to settle these potential civil claims anywhere near the number cited," it said in a statement.

"The negotiations are only just beginning. The bank expects that they will lead to an outcome similar to those of peer banks which have settled at materially lower amounts."  Read more here.

Goldman Reaches $5 Billion Settlement Over Mortgage-Backed Securities

The Wall Street Journal | January 15, 2016      Goldman Sachs Group Inc. agreed to the largest regulatory penalty in its history, resolving U.S. and state claims stemming from the Wall Street firm’s sale of mortgage bonds heading into the financial crisis.

In settling with the Justice Department and a collection of other state and federal entities for more than $5 billion, Goldman will join a list of other big banks in moving past one of the biggest, and most costly, legal headaches of the crisis era.  Read more here