U.S. Urges Cooperation from Banks to Settle Mortgage Cases

Banks are to blame for delaying resolutions of U.S. mortgage investigations by failing to cooperate, a top Justice Department official said, a warning to Deutsche Bank and other lenders still facing billions of dollars in penalties.

Some of the banks that already reached $46 billion in settlements have themselves to blame for creating a "cloud of uncertainty" over them by prolonging talks, Bill Baer, the department's No. 3 official said. Among banks that already settled claims over their dealings in mortgage-backed securities that led to the 2008 financial crisis are JPMorgan Chase & Co. and Bank of America Corp.

"Each paid a lot more than it would have if it had cooperated early on," Baer said in a speech in Chicago Tuesday. "Whether to cooperate with the government in these matters is a choice companies need to make. The RMBS banks chose not to."

Baer's criticism of banks sends a message to lenders still in the department’s crosshairs over the sale of mortgage bonds that they need to step up cooperation to avoid big fines. While he didn't specifically identify any banks, his remarks come as the U.S. has proposed an opening $14 billion penalty against Deutsche Bank, which the bank has said it won't pay.

Bloomberg News
Compliance Originations RMBS
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