Credit Suisse reaches settlement with FHFA
With this news, the Swiss financial company will join the virtual whos-who of big banks that have agreed to shell out in response to government pressure provoked by mortgage issues.
March 24, 2014 at 07:51 AM
2 minute read
The original version of this story was published on Law.com
Following word earlier this year that the Federal Housing Finance Agency (FHFA) would seek more aggressive action regarding the dealing that caused the financial crisis, Credit Suisse announced that it has it agreed to pay $885 million to settle probes into shaky mortgage-backed securities it sold leading up to the financial crisis. The banked released a statement with the financial details of the settlement on Mar. 21.
With this news, Credit Suisse will join the virtual who's-who of big banks that have agreed to shell out in response to government pressure involving mortgage investments. The FHFA sued a number of large banks in 2011 for over $200 billion in mortgage securities.
According to the release that accompanied the deal the, FHFA said, “the settlement resolves all claims in the lawsuit FHFA v. Credit Suisse, et al. as well as all claims against the Credit Suisse defendant in FHFA v. Ally Financial Inc., et al. alleging violations of federal and state securities laws in connection with private-label mortgage-backed securities (PLS) purchased by Fannie Mae and Freddie Mac during 2005-2007.”
Under the terms of the agreement, Credit Suisse will pay $234 million to Fannie Mae and approximately $651 million to the smaller Freddie Mac. With those payments certain claims against Credit Suisse related to the securities involved will be released, and the lawsuit will be closed.
This is the ninth settlement the FHFA has announced in relation to the 18 PLS lawsuits it filed, and it has already collected over $10.1 billion in legal settlements. Settlements have been reached with JPMorgan Chase, Citigroup, Deutsche Bank and Morgan Stanley among others.
The FHFA also reached a separate deal with Wells Fargo, though they were never the subject of official legal action.
For more on government action relating to the financial crisis, check out these stories:
Morgan Stanley could pay $275 million financial crisis settlement to SEC
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