Since the global financial crisis, the world’s largest banks have agreed to pay close to $60 billion in fines just to the U.S. Department of Justice for creating and selling toxic mortgage-backed investments.
These don’t include the tens of billions that the banks have also paid in connection with lawsuits from investors or other federal agencies.
The web of complex mortgage-based financial products they created are largely to blame for creating the global financial crisis of 2007 and 2008, which ultimately led to the Great Recession.
A majority of that money will go directly towards programs designed to help homeowners and borrowers. Here’s a breakdown of some of the biggest banks and their settlements with the Justice Department in the last few years, ordered from oldest to newest:
- JP Morgan (JPM) – $13 billion (2013)
- Citigroup (C) – $7 billion (2014)
- Bank of America (BAC) – $16.7 billion (2014)
- Goldman Sachs (GS) – $5.1 billion (2016)
- Morgan Stanley (MS) – $3.2 billion (2016)
- Deutsche Bank (DB) – $7.2 billion (this week)
- Credit Suisse (CS) – $5.3 billion (this week)
- The fines were the result of investigations into widespread fraud and abuse in the mortgage market and were pursued by multiple U.S. government agencies.
- The DoJ has said that the banks packaged poor-quality mortgages into investments and sold them to clients globally. When the mortgages soured, investors lost billions.
- “Abuses in the mortgage-backed securities industry helped turn a crisis in the housing market into an international financial crisis,” said Benjamin Wagner in 2013, when he was the U.S. Attorney for the Eastern District of California.
- But these settlements don’t paint the whole picture. Banks have also paid out billions more to settle other mortgage-related lawsuits from that period.
- For example, Bank of America paid nearly $12 billion in 2012 to help settle lawsuits over wrongful foreclosures.
- Earlier this year, Wells Fargo (WFC) agreed to pay $1.2 billion for shady mortgage lending practices between 2001 to 2008. This deal was also settled with the Justice Department.