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Deutsche Bank reaches $7.2 billion settlement with US regulators

Mortgage-related securities scandal and 2008 financial crisis
  • Mortgage-backed securities scandal dates back to 2005, when banks gave mortgages to unqualified borrowers, repackaged those loans as safe investments and sold the risk on to investors.
  • The sale of residential mortgage-related securities played a major role in the 2008 financial crisis.
  • Several US banks were investigated including the likes of JP Morgan, Morgan Stanley, Goldman Sachs; they have all been punished.

  • Penalties on US banks for mortgage-related securities fraud
    In 2013, JP Morgan Chase was ordered a fine of $13 billion and in 2014, Bank of America paid $16.7 billion. Citigroup was given $12 billion penalty which has been reduced to $7 billion. In Jan 2016, Goldman Sachs settled for $5.1 billion.

    Deutsche Bank reaches $7.2 billion settlement with US regulators
    23 Dec 2016
  • Deutsche Bank has reached a settlement of $7.2 billion with the Department of Justice in the US (DoJ) over an investigation into the mortgage-backed securities.
  • The agreed sum is far lower than the $14 billion the US had asked the bank to pay in September.
  • The German bank will pay a civil penalty of $3.1 billion and provide $4.1 billion in compensation to customers.

  • Credit Suisse agrees to a $5.28 billion settlement
    23 Dec 2016
  • Swiss bank Credit Suisse has also agreed to pay $5.28 billion to settle its dispute with US authorities over similar mortgage-backed securities lawsuit.
  • It will pay $2.48 billion as fine to settle the claims and would pay $2.8 billion over 5 years as consumer compensation.
  • These are the first settlements in a string of mortgage-related lawsuits by the DoJ for European banks.

  • DoJ sues Barclays for mortgage securities fraud
    23 Dec 2016
  • The US DoJ sued British bank Barclays for alleged mortgage securities fraud, after the two sides failed to reach a settlement.
  • The lawsuit is a rare for big banks which generally settle with the government rather than risk long-drawn litigation, and a possible trial.
  • According to the complaint, Barclays allegedly sold $31 billion in securities and more than half of the underlying loans defaulted.

  • More European banks under investigation
    More European banks are also under investigation over their role in mortgage-backed securities business including HSBC, UBS Group, and Royal Bank of Scotland. US banks with ongoing investigations include Wells Fargo and Moody's Corp.

    This post first appeared on NewsBytes: Latest News, Breaking News India, Today News, Current News, please read the originial post: here

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    Deutsche Bank reaches $7.2 billion settlement with US regulators


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