Published: Fri, January 20, 2017
Economy | By Melissa Porter

Credit Suisse Finalizes $5.28 Bln Mortgage Deal With U.S.

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.

"Unscrupulous lenders knew they could get away with shoddy underwriting when making mortgage loans, because they knew Credit Suisse would buy those defective mortgage loans and put them into securities".

Credit Suisse also admitted that third-party vendors conducting quality control on some loans that it was acquiring found that 25 percent of the loans under review "were designated ineligible because of credit, compliance and/or property defects", the statement of facts said. This civil settlement does not prevent the government from filing the charges against individual executives or the company.

Lynch said the Wednesday settlement reflects the Department of Justice's commitment to accountability for the institutions found responsible for the crisis. Investors, including federally-insured financial institutions, suffered billions of dollars in losses from investing in RMBS issued and underwritten by Credit Suisse between 2005 and 2007.

"Credit Suisse's mortgage misconduct hurt people, including in Colorado", said Acting United States Attorney for the District of Colorado Bob Troyer.

The 2nd U.S. Circuit Court of Appeals in NY ruled that a lower-court judge had erred in dismissing the FDIC lawsuit, which also named units of HSBC Holdings Plc (HSBA.L), Royal Bank of Scotland Group Plc (RBS.L), UBS AG (UBSG.S) and Deutsche Bank AG (DBKGn.DE) as defendants.

In all, Credit Suisse has been slapped with more than $11 billion of fines and legal settlements since the start of 2008, the most of any European bank except Deutsche Bank, according to calculations by Bloomberg. Our office led this investigation into Credit Suisse to protect homeowners, communities, and investors across the country, including here in Colorado.

The FDIC declined to comment as did Deutsche Bank, Credit Suisse and HSBC. That includes the civil penalty portion of the preliminary settlement with the Justice Department announced last month. In December, the onetime insurance executive pledged more cost cuts and lowered targets for the global wealth management and its Asian unit.

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