Banks Return $8 Billion to Taxpayers in 2013 Through Mortgage-Related Settlements
The Federal Housing Finance Agency (FHFA) announced today that in 2013 it recovered more than $8 billion through settlements surrounding private-label mortgage-backed securities (PLS) sold to Fannie Mae and Freddie Mac by banks and other financial institutions during the financial crisis.
A PLS is a mortgage bond that is not issued by Fannie Mae or Freddie Mac, but instead a financial institution or other non-government enterprise. The FHFA, which controls Fannie and Freddie, sued the banks because it alleged they misrepresented the underlying quality of the mortgages that made up the bonds that were sold to Fannie and Freddie.
Today's press release highlighted the six PLS settlements that were reached in 2013. This included a $250 million settlement with Citigroup and a $6.25 million settlement with General Electric . Both of those settlements were previously announced, but the amounts were not disclosed.
In total, there were six firms that settled with the FHFA over the PLS litigation in 2013. In addition to Citigroup and General Electric there was also:
In addition, Wells Fargo settled for $335 million although it was not part of the original group of 17 financial institutions that the FHFA announced it would be suing in 2011 to recover the losses at Fannie and Freddie.
There are still 12 financial institutions that have not settled with the FHFA for PLS litigation, including Bank of America, Goldman Sachs, Barclays, and others.
The article Banks Return $8 Billion to Taxpayers in 2013 Through Mortgage-Related Settlements originally appeared on Fool.com.Fool contributor Patrick Morris owns shares of Bank of America and General Electric Company. The Motley Fool recommends Bank of America, Goldman Sachs, and Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup, General Electric Company, JPMorgan Chase, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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