Counterparties: 2012 — The year of bank fraud
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Itâ€™s been a relatively decent year for financial stocks: theyâ€™ve had their best performance since 2003. Itâ€™s truly been a boom year, though, in investigations, lawsuits, fines, and settlements at the worldâ€™s biggest and most important banks. There are 28 banks on the FSBâ€™s list of systemically important financial institutions, and as Felix writes, â€śpretty much the whole financial sector is still trading at less than book valueâ€ť.
What follows is a list of notable accusations, admissions and settlements in 2012 alone. (Itâ€™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; MBIAâ€™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 forÂ $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 Madoffâ€™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)
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 â€śdefaulted the government into insuringâ€ť 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)
HSBC: settled money laundering charges for $1.9 billion; set aside $1 billion for future settlements related to mis-selling loan insurance and interest rate hedges in the UK; Libor settlement still to be reached. (Price to book: 1.17)
ING:Â settled charges that it violated sanctions against Iran, Cuba, etc. for $619 million. (Price to book: 0.5)
JP Morgan Chase: being sued by NY state for MBS issued by Bear Stearns; class action lawsuit and criminal probeÂ over failed derivatives trades in its Chief Investment Office; one of five banks participating in the $25 billion national mortgage settlement. (Price to book:0.87)
Mitsubishi UFJ: paid an $8.6 million fine for violating US sanctions on Iran, Sudan, Myanmar and Cuba. (Price to book: 0.54)
Morgan Stanley: fined $5 million for improper investment banking influence over research during Facebookâ€™s IPO. (Price to book: 0.63)
Royal Bank of Scotland: $5.37 billion shareholder lawsuit related to 2008 rights issuance; set aside $650 million to cover claims it mis-sold payment protection products; also fined by the FSA for mis-sold interest rate hedges. (Price to book: 0.28)
Santander: fined by the FSA for mis-sold interest rate hedges. (Price to book: 0.77)
SociĂ©tĂ© GĂ©nĂ©rale: rogue trader Jerome Kerviel loses appeal his appeal 3-year sentence for trades that generated $6.5 billion in losses. (Price to book: 0.45)
Standard Chartered: $340 million fine paid to NY state department of financial services for allegedly hiding the identity of customers in transactions with Iran and drug cartels; $327 million paid to the Federal Reserve and US Treasuryâ€™s anti-money laundering unit.
State Street: fined $5 million for lack of CDO disclosure. (Price to book: 1.09)
Wells Fargo: Federal lawsuit over mortgage foreclosure practices ongoing; paid $175 million over mortgage bias claims; one of five banks participating in the $25 billion national mortgage settlement. (Price to book: 1.29) — Ben Walsh
On to todayâ€™s links:
Person of the Year: The Corporation – Tim Fernholz
Time’s person of the year: Obama – Time
At selective colleges, high-income applicants outnumber their low-income peers 15 to 1 – Bloomberg