Counterparties: 2012 — The year of bank fraud | Felix Salmon
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It’s been a relatively decent year for financial stocks: they’ve had their best performance since 2003. It’s truly been a boom year, though, in investigations, lawsuits, fines, and settlements at the world’s biggest and most important banks. There are 28 banks on the FSB’s list of systemically important financial institutions, and as Felix writes, “pretty much the whole financial sector is still trading at less than book value”.
What follows is a list of notable accusations, admissions and settlements in 2012 alone. (It’s long, so just scroll down if you just want the links):
Bank of America: the US Justice Department is seeking $1 billion in fines for troubled loans sold to Fannie and Freddie; MBIA’s lawsuit against Countrywide, which was disastrously acquired by BofA, rolls on; BofA is one of five banks participating in the $25 billion national mortgage settlement. (Price to book: 0.56, here and throughout via Yahoo Finance)
Bank of China: the families of Israeli students killed in a 2008 terrorist attack are suing the BOC for $1 billion “intentionally and recklessly” handling money for terrorist groups.
Bank of New York Mellon: a subsidiary paid $210 million to settle claims it advised clients to invest in Bernie Madoff’s ponzi scheme; the DOJ continues to investigate possible overcharges for currency trades that it says generated $1.5 billion in revenue. (Price to book: 0.86)
Barclays: $450 million settlement in the Libor scandal; also fined by the FSA for mis-sold interest rate hedges. (Price to book: 0.72)
BBVA: settled overdraft suit for $11.5 million. (Price to book: 0.83)
Citigroup: settled CDO lawsuit for $590 million; one of five banks participating in the $25 billion national mortgage settlement; paid $158 million to settle charges it “defaulted the government into insuring” risky mortgages. (Price to book: 0.62)
Credit Suisse: sued by NY state for allegedly deceiving investor in the sale of MBS. (Price to book: 0.85)
Deutsche Bank: settled a DOJ mortgage suit for $202 million; FHFA fraud case is ongoing. (Price to book: 0.56)
Goldman Sachs: FHFA fraud case is ongoing; after a ruling by federal appeals court, a class action lawsuit over MBS will go forward. (Price to book: 0.91)