A major international lender with branches in Australia has agreed to pay US$885 million to settle government claims related to mortgage-backed securities.
Swiss bank Credit Suisse reached the agreement with the Federal Housing Finance Agency, which had sued the lender for allegedly misleading mortgage giants Fannie Mae and Freddie Mac about the quality of mortgage-backed securities sold between 2005 and 2007.
“As a result of defendants' misstatements and omissions of material fact, Fannie Mae and Freddie Mac have suffered substantial losses as the value of their holdings has significantly deteriorated,” court documents said.
Under the terms of the settlement, Credit Suisse will pay around $234 million to Fannie Mae and around $651 million to Freddie Mac, institutions the US government seized amid the 2008 financial crisis to prevent their collapse.
The settlement resolved all claims in the lawsuit, as well as claims against Credit Suisse in a separate lawsuit filed primarily against Ally Financial, according to the FHFA.
The FHFA filed lawsuits against 18 banks in 2011 alleging problems with their sales of mortgage-backed securities. The Credit Suisse agreement is the ninth settlement announced in relation to those suits, the FHFA said.
Lenders that have yet to settle with the agency include Bank of America and Goldman Sachs, according to a MarketWatch report.
Credit Suisse is also one of 14 Swiss banks under US investigation for allegedly accepting tens of billions of undeclared dollars from US citizens trying to avoid taxes.
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