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Banks open fresh settlement talks
By Kara Scannell in New York
Several global banks facing charges of mis-selling mortgage-backed securities have approached New York’s attorney-general about potential multibillion-dollar settlements in the wake of JPMorgan Chase’s tentative agreement to pay $13bn in fines and consumer relief.
“I have already had expressions of interest from other institutions,” Eric Schneiderman, New York attorney-general and co-chairman of the state-federal working group investigating sales of residential mortgage-backed securities, said in an interview with the Financial Times.
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“It is my hope that [JPMorgan’s deal] is the first of a series of settlements that collectively will be the largest financial settlement in the history of the US,” he added.
Mr Schneiderman declined to identify which financial institutions had reached out to his office but said he views JPMorgan’s tentative deal as “a template for future settlements.” At least nine banks, including Royal Bank of Scotland, Credit Suisse and Bank of America, are under investigation for mortgage-securities sales in the lead-up to the financial crisis, as previously reported by the FT.
As part of its deal JPMorgan is set to pay $9bn in cash and provide $4bn in homeowner relief, such as renegotiating mortgages for owners who owe more money than their house is worth.
“Some [banks] may provide more consumer relief or more cash. The idea is it’s time to pay up for the misconduct that caused the bubble and crash of the American housing market. We’re very pleased [with] the collective efforts of our working group,” Mr Schneiderman said.
“The idea that runs through all of our work in this area is to get money to people who are hurt,” he added.
The US Department of Justice, which has led settlement talks with JPMorgan, has more than 200 lawyers, analysts and investigators from 10 US attorneys’
