Another $50 Billion Coming Due in Mortgage Scandal Fines
Another $50 Billion Coming Due in Mortgage Scandal Fines (YahooFinance)
If you asked the executives at Bank of America, Morgan Stanley, Goldman Sachs, Royal Bank of Scotland, Citibank (plus 11 other major international banks) to pick a number between 1 and 20, it’s a fair assumption they’d all pick “13.” That is the number of billions JPMorgan was asked to fork over by the U.S. government as a settlement for the bank’s role in the U.S. mortgage crisis. It’s also the figure being used as a gauge for these banks to determine how much they’ll be fined for their part in financing bad mortgages between 2005-08. Defaults on these mortgages ultimately led to the housing market debacle that leeched value from American family homes. Now, Wall Street estimates that these banks could be forced to cough up $50 billion in additional fines, if they are found guilty of the same fraud perpetrated by JPMorgan. That $50 billion figure is equal to roughly half of the total annual profit of large American banks in 2012. Should that number prove to be accurate, how do you think investors in these accomplice banks will react? Will they flee in anticipation of future guilty verdicts and fines? We’ll see in the weeks ahead as this all shakes out.