$550m of HSBC for mortgage case with US regulators

Bank of America in August paid $16.7bn  and HSBC is on the row. It is the 16th bank to reach an agreement with the Federal Housing Finance Agency (FHFA) over the issue. Royal Bank of Scotland and Nomura have yet to settle their cases.


It si said that the British bank HSBC will pay $550m (£338m) to US regulators in order to resolve the claims of mis-sold mortgage-related bonds that it sold to US mortgage giants Fannie Mae and Freddie Mac between 2005 and 2007

HSBC said it was "pleased to resolve the matter".

The bank was accused  of making $6.2 billion of mortgage-backed securities apparently standard and meeting all guidelines while they were not fulfilling those requirements. HSBC has previously denied the allegations.

$17.9 has now been recouped from settlements with banks by the FHFA.

HSBC's fine is significantly much less than that of US banking giant Bank of America.

Fannie Mae and Freddie Mac were bailed out by US government and it lost more than $30bn in the financial crisis. Some of it's investment were in subprime mortgages.

Bank of America $16.7bn settlement increased it's share price even though the bank's profit will decrease.

Bank of America and US authorities has reached to the settlement that it will pay $16.7bn (£10bn) to US authorities for misleading investors about the quality of loans it sold. The settlement will cut the bank's third-quarter profits by $5.3bn. The associate attorney general said "no institution is either too big or too powerful to escape" punishment.

On Wall Street, shares in Bank of America opened 1.5% higher following the settlement.

It is considered a historic step forward. The cash component consists of a $5 billion civil penalty and $4.63 billion in compensation payments.

Before Bank of America bought the loans in 2008, these loans were sold by Countrywide Financial and Merrill Lynch.

Much of which will go towards homeowners struggling with their mortgages and Bank of America will provide consumer relief worth about $7 billion and  pay a total of $9.65 billion in cash.

There is intense focus on Merrill Lynch selling mortgage loans to investors without explaining the full extent of the risk involved and Countrywide Financial lending biggest amount at the time of the crisis.

"We believe this settlement, which resolves significant remaining mortgage-related exposures, is in the best interests of our shareholders, and allows us to continue to focus on the future" Brian Moynihan, chief executive of the bank, said.

It's a step to hold Wall Street accountable for the bad conduct that led to the financial crisis. And the sums involved in Bank of America's settlement dwarf the $13bn paid by another banks, JP Morgan to resolve a similar matter. The penalty exceeds Bank of America's entire profits last year yet this deal brings a measure of closure. This settlement of bank was the biggest remaining hurdle of all cases. The bank has already paid tens of billions of dollars to settle cases related to the financial crisis.

Bank of America paid $9.5bn to settle charges that it misled US mortgage lenders Fannie Mae and Freddie Mac over mortgage securities, in March this year .