Royal Bank of Scotland pays $8.3 billion to settle subprime mortgage probe still faces DOJ investigation

 

 

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The Royal Bank of Scotland has agreed to pay $8.3 billion to the Federal Housing Finance Agency to cover a range of allegations linked to its involvement  in packaging and selling on subprime mortgages in the lead up to the financial crisis. The bank still faces investigations from several U.S. agencies including criminal and civil investigations by the U.S. Department of Justice. The bank still faces probes from several U.S. agencies including criminal and civil investigations by the U.S. Department of Justice. RBS warned Wednesday that “further substantial provisions and costs may be recognized…depending upon the final outcomes.” Analysts at Jefferies estimate RBS will set aside a further $2.5 billion by the end of the year to cover future Justice Department settlements. So far, the bank hasn’t had meaningful discussions with the Justice Department over any settlement, said RBS Chief Financial Officer Ewen Stevenson. See Settlement Agreement The settlement resolves all claims in the lawsuit FHFA v. The Royal Bank of Scotland Group plc et al., Case No. 3:11-cv-1383 in the United States District Court for the District of Connecticut. See Complaint: RBS Complaint 7.12.17
FHFA filed a total of 18 lawsuits in 2011 as conservator of Fannie Mae and Freddie Mac alleging violations of various statutory provisions by participants in the mortgage finance sector. The settlement with RBS represents settlement of the 17th case of those filed by FHFA. FHFA received a favorable verdict after trial in the 18th case and that verdict is currently the subject of an appeal.
Jeffrey Newman represents whistleblowers