Citing SNL Financial and Bernstein Research, The Wall Street Journal reported that the U.S. banks may pay up to $107 billion in mortgage-related settlements stemming from the financial crisis. The sum includes $66 billion, which the six largest U.S. banks have agreed to pay since 2010. Bank of America is to settle the biggest piece of $43.9 billion, Wells Fargo has agreed to pay $9.2 billion, and J.P. Morgan is ready to give $7.8 billion. The obligation of Citigroup is $4.3 billion, Goldman Sachs is going to contribute $921 million, and Morgan Stanley will remit $330 million.
Recently, JP Morgan has agreed to pay $13 billion in legal expenses this year. According to Bernstein Research, the bank will have to share out extra $8-16 billion. The additional payments of Bank of America are estimated at $10 billion, and Citigroup’s expenditures are near $2 billion.
In August, Bloomberg released a report on the largest bank expenses in mortgage and crisis-related settlements. The agency said in 2008-2013 the banks spent $103 billion. The part of legal expenses amounted to $56 billion and the other one was the investors’ compensation. The U.S. banks were accused of misleading the investors with mortgage bonds selling.
Overall, the matter is that the financial organizations knew about the low quality of securities, but posed them as high-yielding assets. Later, when the U.S. was hit by mass inability to pay back mortgage loans, the Treasury obligations started depreciating, and, as the government reckons, it was one of the reasons for the financial crisis in 2008.
