A Quick Look At How Much The Largest Banks Have Paid The DoJ To Settle Mortgage-Related Issues

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Taking into account the settlement in principle reached by Deutsche Bank and Credit Suisse with the U.S. Department of Justice (DoJ) last week, seven major global banking giants have now settled investigations by the U.S. regulator into their mis-selling of legacy residential mortgage-backed securities (RMBS) for a total of $59 billion. This figure includes $21.6 billion in monetary penalties imposed by the DoJ, $14.7 billion in settlements and fines by other federal and state regulatory agencies and $22.7 billion in customer relief by the banks (which include loan forgiveness and financing for affordable housing).

(in $ million) DoJ Penalty  Agency Fines Customer Relief Total Fine Date Press Release
Bank of America $5,000 $4,650 $7,000 $16,650 Aug 21, 2014  DoJ Website
JPMorgan Chase $2,000 $7,000 $4,000 $13,000 Nov 19, 2013  DoJ Website
Deutsche Bank $3,100 $0 $4,100 $7,200 Dec 23, 2016  DB Website
Citigroup $4,000 $500 $2,500 $7,000 Jul 14, 2014  DoJ Website
Credit Suisse $2,480 $0 $2,800 $5,280 Dec 23, 2016  CS Website
Goldman Sachs $2,385 $875 $1,800 $5,060 Apr 11, 2016  DoJ Website
Morgan Stanley $2,600 $1,650 $550 $4,800 Feb 11, 2016  DoJ Website
Total $21,565 $14,675 $22,750 $58,990    

Besides these settlements, which have been inked over a period of more than three years, the DoJ recently filed a lawsuit against Barclays (NYSE:BCS) for misleading investors in 36 RMBS deals worth $31 billion after settlement talks with the British banking giant broke down earlier this month. [1] The regulator is also investigating similar malpractices by UBS (NYSE:UBS), HSBC (NYSE:HSBC) and RBS (NYSE:RBS).

It should be noted here that the figures for Bank of America and JPMorgan are considerably elevated as they assumed the legal liabilities of Countrywide, Merrill Lynch and Bear Stearns – companies they acquired at the peak of the economic downturn of 2008. Leaving these two banks out, and focusing on only the “DoJ Penalty” and “Consumer Relief” fines for the remaining five banks, we can see that the average fine figure per bank has been ~$5.2 billion. Assuming the four banks that are yet to settle with the DoJ reach individual agreements for this figure, the total fine figure for the eleven banks concerned could cross $80 billion.

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See the full Trefis analysis for Goldman Sachs |  Morgan StanleyJPMorganCitigroup | Bank of America | Barclays | Deutsche Bank | Credit Suisse |  UBS |  RBS | HSBC

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Notes:
  1. United States Sues Barclays Bank to Recover Civil Penalties for Fraud in the Sale of Residential Mortgage-Backed Securities, DoJ Press Releases, Dec 22 2016 []