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Bank Fines Continue Six Years After Crisis
Friday, August 21, 2015 6:50 AM

Payouts continue to grow for settlements related to lending practices during the financial crisis, but that’s tapering to a trickle.

The six-largest U.S. banks paid more $132 billion in relief since the financial crisis, according to a report from research company SNL Financial.

Goldman Sachs Group tentatively agreed to a $270 million lawsuit settlement related to crisis-era, residential-mortgage-backed securities. The company subsequently raised the cap on its “reasonably possible” future legal expenses to $5.9 billion from its May estimate of $3.8 billion.

Wells Fargo (that assumed Wachovia during the recession) meanwhile, recently set a probable cap on further costs at $1.4 billion, up from $1.2 billion at the end of the first quarter.

Morgan Stanley absorbed by far the most pain since last August, due to a $2.6 billion settlement to end a Justice Department probe into allegations it misrepresented the quality of its mortgage-backed securities.

J.P. Morgan Chase (that assumed Bear Stearns and Washington Mutual during the recession) last month agreed to pay $388 million on mortgage-related securities.

Bank of America (that was paired with Countrywide Financial and Merrill Lynch) last year inked a $16.65 billion settlement.

Citigroup in July 2014 said it would deliver a total of $7 billion in payments to settle certain matters with state and government regulators and consumers. The U.S. Securities and Exchange Commission said Citigroup recently agreed to pay nearly $180 million to investors to settle accusations that it made false and misleading representations concerning the risks of two hedge funds that ultimately collapsed during the financial crisis.

 

Source:  The Wall Street Journal, 18 August 2015