Aug. 14 (UPI) — Swiss bank UBS Global has announced its agreement to pay a fine of over $1.4 billion to U.S. authorities in order to settle charges of selling risky residential mortgage-backed securities that contributed to the 2008 financial crisis.
In a concise statement, the banking giant stated that it will transfer $1.435 billion to the Department of Justice as a resolution of all civil claims related to UBS’s legacy RMBS business in the U.S.
Federal prosecutors have described the settlement as an acknowledgment of the bank’s “fraudulent conduct” that contributed to the “fueling of the 2008 financial crisis.”
“People all across the country experienced financial ruin and emotional devastation, and many are still recovering nearly 15 years later,” commented Associate Attorney General Vanita Gupta in a statement.
“This settlement demonstrates the Department’s commitment, along with our partner agencies, to hold accountable those who break the law and undermine the well-being of American families,” she added.
U.S. Attorney for the Northern District of Georgia, Ryan Buchanan, emphasized that UBS and other financial institutions involved in the sale of fraudulent residential mortgage-backed securities wrongly believed they were above the law.
“The extent of this settlement should serve as a warning to both large and small financial institutions, highlighting the significant penalties that can result when corporations misrepresent vital information to investors and erode trust in our public markets,” he warned.
The settlement with UBS marks the conclusion of the final litigation brought against more than a dozen financial institutions by the RMBS Working Group, which consists of state and federal investigators from entities such as the Federal Housing Finance Agency, the Department of Housing and Urban Development, the Securities and Exchange Commission, and the FBI.
Under this initiative, the Department of Justice has collected over $36 billion in RMBS-related civil penalties from 18 major domestic and foreign entities, including Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, General Electric, Goldman Sachs, HSBC, JPMorgan, Moody’s, Morgan Stanley, Royal Bank of Scotland, S&P, and Wells Fargo.
The financial crisis began in 2007 when losses on residential mortgage-backed financial assets led to strains in global financial markets, ultimately causing a recession in December 2007. The aftermath of the crisis, labeled “the Great Recession,” resulted in an estimated cost of 15% of the country’s GDP, equivalent to around $4.6 trillion by 2016. Additionally, over 6 million Americans lost their homes to foreclosure.
