The government’s wide-ranging investigation into the mortgage meltdown is leaving no bank unscathed.
Regulators have been methodically extracting their pound of flesh from Wall Street’s largest firms after the 2008 housing collapse left investors holding billions of soured securities backed by mortgage loans.
Yesterday, JPMorgan Chase and Credit Suisse became the latest banks to settle charges they misled investors in selling complex mortgage-backed bonds. The financial giants agreed to pay more than $460 million to settle charges brought by the Securities and Exchange Commission.
The Wall Street watchdog has doled out fines and penalties totaling nearly $2.6 billion since the start of the mortgage crisis in 2008. That includes $550 million Goldman Sachs shelled out two years ago to settle charges that it duped investors in marketing mortgage-backed bonds.
Regulators also signaled they are just getting started.
In January, the Justice Department formed a federal mortgage task force, which counts New York Attorney General Eric Schneiderman as a co-chair, to hold banks accountable for shoddy mortgage practices.
JPMorgan, led by Jamie Dimon, agreed to pay $296.9 million to resolve allegations that it misstated the delinquency status of mortgages that underpinned a batch of complex debt known as residential mortgage-backed securities, or RMBS.
Part of the JPMorgan fine is related to now-defunct Bear Stearns, which JPMorgan scooped up in a shotgun merger in March 2008.
“In many ways, mortgage products such as RMBS were ground zero in the financial crisis,” SEC Director of Enforcement Robert Khuzami said in a statement.
“Misrepresentation in connection with the creation and sale of mortgage securities contributed greatly to the tremendous losses suffered by investors once the US housing market collapsed,” Khuzami said.
Credit Suisse, led by Brady Dougan, settled similar charges that it rang up $55.7 million in gains and sidestepped losses related to RMBS deals, while investors suffered $10 million in losses.
Schneiderman said yesterday that the SEC and other regulators are working together to target the banking industry’s bad actors.
“Today’s actions are another step forward in the process of bringing accountability for the misconduct that led to the collapse of the housing market,” he said.