Big Banks Brace For Multibillion-Dollar Settlement With The SEC Over MBS, Report

FBN’s Charlie Gasparino reports that following New York Attorney General Eric Schneiderman’s lawsuit against JPMorgan Chase (JPM) for alleged misconduct at Bear Stearns, “all the banks are bracing for a multibillion-dollar settlement with the Securities and Exchange Commission [SEC] over practices related to their packaging and sale of mortgage-backed securities during the financial crisis.” Gasparino also reports that each bank could pay “hundreds of millions of dollars” amounting to the “largest financial crisis related fine and settlement.” Excerpts from the report can be found below, courtesy of Fox Business Network.

On the banks bracing for a multibillion-dollar settlement with the SEC:

“The Schneiderman suit is very narrow; it’s just about Bear Stearns-related practices. Here is what we know from sources close to the SEC and close to the banks involved: the suit that just came out on Schneiderman overshadows a bigger case. The SEC, sources are telling us, is basically ready to do a deal with the banks. All the banks are bracing for a multibillion-dollar settlement with the SEC over practices related to their packaging and sale of mortgage-backed securities during the financial crisis. It’s not just JPMorgan; it’s all of them, and it’s a big number. From what we understand, it’s hundreds of millions of dollars from each one that could be over a billion dollars. This could be the largest financial crisis related fine and settlement that has been levied so far. Why is the SEC mad? Schneiderman came up with what they think is pretty much a cheapo case, very narrow, on Bear Sterns…JPMorgan is not really worried about Bear, what they’re worried about is this bigger settlement which will cover the broader bank practices of giving these mortgages, creating them, putting them in mortgage-backed securities and selling them.”

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