US banks to settle on financial crisis penalties: report
NEW YORK (AFP) – Several major US banks are close to an agreement with the Wall Street regulator to settle fraud allegations related to the “toxic” mortgages behind the 2008 financial crisis, a report said Friday.
An initial agreement with the Securities and Exchange Commission (SEC) could be settled next week, the Wall Street Journal said, citing sources close to the case, noting penalties would likely vary for different institutions.
Among the banks in negotiations with the SEC are JPMorgan Chase, Citigroup, Morgan Stanley, Merrill Lynch (Bank of America) and UBS.
Few of the settlements are likely to top the $550-million penalty imposed on the Goldman Sachs Group in 2010 over allegations it misled investors over a mortgage investment program, the Journal said.
The financial crisis that stemmed from trillions of dollars in risky mortgages promoted by the top Wall Street firms has engulfed the globe and cost millions of jobs in the years since.
That mortgage bubble grew, burst and infected banks’ balance sheets thanks to the magnifying effect of complex financial derivatives, noted an official US report issued earlier this year.
The Financial Crisis Inquiry Commission, after reviewing millions of pages of documents and interviewing around 700 witnesses, concluded in January that bankers, lawmakers, regulators and irresponsible borrowers all helped plunge the world into financial panic.
“This financial crisis was avoidable. The crisis was the result of human action and inaction, not Mother Nature or computer models gone haywire,” the report said.