Credit Suisse finalizes $5.28 bn deal over US mortgage claims

8 years ago - Published in Finance, Technical Analysis

Department of Justice (DOJ) announced on Wednesday that Credit Suisse will pay $5.28 billion in the settlement, which relates to the packaging, securitization, issuance, marketing and sale of residential mortgage-backed securities between 2005 and 2007. Credit Suisse announced in late December that it reached a settlement in principle with the DOJ which made it official.

Under the terms of the settlement, Credit Suisse will pay $2.48 billion as a civil penalty under the Financial Institutions Reform, Recovery and Enforcement Act.

The settlement also stipulates that Credit Suisse will provide $2.8 billion in other relief, including relief to underwater homeowners, distressed borrowers and affected communities, in the form of loan forgiveness and financing for affordable housing. 

"Today's settlement underscores that the Department of Justice will hold accountable the institutions responsible for the financial crisis of 2008. Credit Suisse made false and irresponsible representations about residential mortgage-backed securities, which resulted in the loss of billions of dollars of wealth and took a painful toll on the lives of ordinary Americans," said Attorney General Loretta E. Lynch.

According to the DOJ, the settlement “expressly preserves” the government’s ability to bring criminal charges against Credit Suisse or any of its employees. The settlement also does not release any individuals from “potential criminal or civil liability,” the DOJ said. 

Additionally, Credit Suisse agreed to fully cooperate with any ongoing investigations related to the conduct covered by the settlement, the DOJ said.

In a statement, Credit Suisse said that it is “pleased” to put this issue in the past.

“Credit Suisse is pleased to have reached an amicable settlement that allows the bank to put this legacy matter behind it, while also protecting the interests of its clients, employees and other stakeholders,” the bank said. “We remain relentlessly focused on serving our clients and continuing our progress toward our strategic goals of being a resilient, profitable and compliant organization.”