Banksters Must Pay

Deutsche Bank and Credit Suisse have agreed to pay out billions to resolve a probe into the alleged mis-selling of mortgage-backed securities at the height of the US housing bubble, striking deals before the Trump administration takes power.

  FT

About time.

After months of its negotiations with the DoJ, Deutsche said it had reached a $7.2bn deal with US authorities. Germany’s biggest bank had agreed “in principle” to pay a $3.1bn civil penalty and also provide $4.1bn in relief to consumers, over time.

Over how much time?

These guys have to pay $3 billion? Wow. That's got to make the think twice, eh? How many billions did they rake in on their fraudulent deals? How many people did they ruin? How many countries around the globe are still reeling?

"Alleged misselling."

The consumer relief portions of the settlements are typically far less painful for the banks than the straight payments since they are paid out over a period of years and not in cash. In the case of Deutsche Bank, Mr Abouhossein said the relief would be “primarily in the form of loan modifications and other assistance to homeowners and borrowers, and other similar initiatives to be determined, and delivered over a period of at least five years”.

[...]

Credit Suisse has also agreed to pay $5.28bn to resolve a DoJ probe of similar alleged actions. The Swiss bank said it will pay a civil penalty of $2.48bn and, like Deutsche’s agreement, provide consumer relief to the tune of $2.8bn over the course of five years.

I bet they're quaking in their boots.

The Deutsche deal caps a turbulent few months for the German bank, which saw its share price drop to a record low in September after it emerged the DoJ had made a $14bn claim.

So, they're getting a $10 billion discount. Nice.

The consumer relief portions of the settlements are typically far less painful for the banks than the straight payments since they are paid out over a period of years and not in cash. In the case of Deutsche Bank, Mr Abouhossein said the relief would be “primarily in the form of loan modifications and other assistance to homeowners and borrowers, and other similar initiatives to be determined, and delivered over a period of at least five years”.

[...]

Angela Merkel’s administration was forced to state that it would not bail out the bank, whose market capitalisation had sank to just $18bn.

[...]

Ingo Speich, a portfolio manager at Union Investment, one of Deutsche’s top 25 shareholders, said: “It’s a good compromise. The bank has shed one of the issues weighing on it, and a little bit of uncertainty will come out of the share price . . . It’s not the end of all their problems, but it’s certainly not a disappointment either.”

[...]

“We see the announcement by DB today around reaching a settlement in principle with the DoJ on the RMBS issue in the US as very positive,” said Kian Abouhossein of JPMorgan.

Indeed.

Barclays felt it should pay a fine of only about $1bn if its settlement was to be proportional with those of its rivals. It was prepared to settle for a total of about $2bn, including customer redress, according to two people briefed on the matter. But the DoJ pushed for something closer to the $5bn settlements that both Deutsche and Credit Suisse were thought to be close to agreeing, the people said.

[...]

From 2005 to 2007, Barclays fraudulently sold more than $31bn of mortgage-backed securities in 36 separate deals, prosecutors in New York said on Thursday.

And they were balking at a $5 billion fine.

“Barclays jeopardised billions of dollars of wealth through practices that were plainly irresponsible and dishonest,” said Loretta Lynch, the US attorney-general. “We are sending a clear message that the Department of Justice will not tolerate the defrauding of investors and the American people.”

A $5 billion penalty for the fraudulent theft of $31 billion and an accompanying global meltdown sends a message all right. But not that one.

..but hey, do what you want...you will anyway.