After being accused of deceiving its investors by selling faulty mortgage securities, Credit Suisse will pay $5.3 billion in a settlement. This news comes just after Deutsche Bank agreed to a $7.2 billion settlement over similar allegations.
The Department of Justice announced Wednesday that as part of the agreement, Credit Suisse pays $2.48 billion as a penalty and $2.8 to consumers toward loan forgiveness. Another part of the settlement calls for Credit Suisse to admit that its home loans were nowhere near the underwriting guidelines. A source even says that many of the employees describe them as “complete trash.”
Credit Suisse, however, seemed relieved when it announced the settlement decision in December. Even with the relief of the agreement, Credit Suisse isn’t out of the woods yet. U.S. penalties could possibly go up since the bank still battles lawsuits by New York and New Jersey. Both states have similar quarrels with the bank over billions lost by investors.
After President Barak Obama started the campaign to hold Wall Street accountable for actions that led to one of the largest recessions in years, many of the settlements between consumers and banks began to arise. Banks all over the country, including JPMorgan Chase and Bank of America, paid out a total $46 billion.
Credit Suisse’s settlement is one of the last to be dealt with under the Obama Administration. Other companies that are still under investigation by the U.S. Department of Justice are Royal Bank of Scotland, Wells Fargo & Co, UBS Group AG, and HSBC.