Big banks' bloated mortgage tab

@CNNMoneyInvest February 9, 2012: 5:15 PM ET
As part of a billion-dollar settlement, four federal agencies handed out fines to lenders totaling $2.2 billion.

As part of a billion-dollar settlement, four federal agencies handed out fines to lenders totaling $2.2 billion.

NEW YORK (CNNMoney) -- Not to be outdone by the U.S. attorneys general, four other federal agencies were quick to lay claim to $2.2 billion of the massive mortgage settlement reached Thursday with five of the nation's biggest mortgage lenders.

Shortly after the $26 billion settlement was announced, the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Trade Commission and the Eastern District of New York all came out with their own releases that detailed what they would get.

Bank of America (BAC, Fortune 500) was hit with the largest single fine by the U.S. Attorney for the Eastern District of New York, which announced it would collect $1 billion from the bank for claims related to Countrywide Financial's alleged underwriting and origination of fraudulent mortgages. In 2010, Countrywide agreed to pay $108 million for overcharging borrowers on loans it serviced before it was acquired by Bank of America.

Bank of America said it will pay $11.8 billion as part of Thursday's settlement, according to a company release.

The Federal Reserve issued sanctions totaling $766.5 million against Bank of America, Citigroup (C, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Wells Fargo (WFC, Fortune 500), and Ally Financial for "unsafe and unsound practices" related to mortgages.

The Office of the Comptroller of the Currency also announced that it would force Bank of America, Citigroup, Chase and Wells to pay $394 million in civil penalties should the banks fail to fulfill the terms of the settlement.

Have big bank stocks finally turned a corner?

And finally, the Federal Trade Commission said Bank of America would have to pay an additional $8 million to struggling homeowners for "violative practices in the mortgage markets." These fines are in addition to the $28 million the commission forced Bank of America to refund to homeowners who are behind on the bank's mortgages.

Thursday's announcements amount to the largest payout that government regulators have forced banks to pay since the 2008 financial crisis.

Since the crisis, federal regulators, including the Securities and Exchange Commission, the FTC and the Justice Department, have forced banks to pay nearly $6 billion to consumers and the Treasury for problems perpetrated by the banks during and leading up to the financial crisis. That's not including Thursday's settlements and fines.

The largest settlement (prior to today's) came in January 2011, when Bank of America agreed to pay $3 billion to Freddie Mac and Fannie Mae to resolve a faulty mortgage loan dispute from Countrywide.

Roughly one-third of the financial crisis payouts have come from the SEC's Division of Enforcement, which has recovered nearly $2 billion from banks and other lenders.

With Thursday's mortgage settlements, banks now have the largest anticipated payout behind them. Bank stocks were largely flat Thursday, but nearly all the largest banks have inked impressive gains in 2012. Bank of America's stock is up nearly 50% since the start of the year.

Still financial crisis-related litigation isn't over. The SEC still has a number of cases related to the financial crisis pending.  To top of page

Index Last Change % Change
Dow 17,356.87 288.00 1.69%
Nasdaq 4,644.31 96.48 2.12%
S&P 500 2,012.89 40.15 2.04%
Treasuries 2.15 0.08 3.72%
Data as of 4:34am ET
Company Price Change % Change
Bank of America Corp... 17.26 0.54 3.23%
General Electric Co 24.43 0.00 0.00%
Apple Inc 109.41 2.66 2.50%
Cisco Systems Inc 26.81 0.22 0.85%
Microsoft Corp 45.74 0.58 1.28%
Data as of Dec 17
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.07%4.07%
15 yr fixed3.13%3.09%
5/1 ARM3.22%3.08%
30 yr refi4.12%4.12%
15 yr refi3.19%3.16%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.