Department of Justice

S&P Settles RMBS Lawsuits for $1.375 Billion

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On February 2, Standard & Poor’s Ratings Services settled claims brought by the Department of Justice, 19 states and the District of Columbia related to credit ratings it issued and maintained for RMBS and CDOs before the financial crisis. As part of the settlement, it agreed to pay a total of $1.375 billion, with $687.5 million paid to the Department of Justice and $687.5 million to the states and District of Columbia.  Settlement Agreement.

Also on February 2, S&P settled similar claims brought by the California Public Employees’ Retirement System (CalPERS). The terms of that settlement agreement have not been made public.

 

Did an Obscure Remark in a Recent Regulatory Publication Signal a New Interpretation of the Anti-Tying Rules?

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In 2003, the Federal Reserve released its proposed interpretation of the anti-tying provisions of the Bank Holding Company Act Amendments, in which it stated that market power and anti-competitive effects were not necessary elements of an illegal tying arrangement.  Despite substantial commentary on the Federal Reserve’s proposed interpretation from financial institutions and other regulators, including the Department of Justice, the Federal Reserve has not revised its proposed interpretation of the anti-tying provisions of the BHC Act.  This alert discusses a recent regulatory publication raising the possibility that the Federal Reserve may be revisiting its earlier stance.  For more information, please click here.

Fed Agreement in Principle with Banking Organizations Regarding Monetary Sanctions

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On February 9, the Fed announced its agreement in principle with five banks on $766.5 million in monetary sanctions against the banks for unsafe and unsound processes and practices in residential mortgage loan servicing and foreclosure processing. The sanctions are issued in conjunction with, and included in, the settlement agreement among the banks, state attorneys general, and the Department of Justice, also dated February 9. Under the Fed’s agreement, the banks will be required to pay the amount of the sanctions not used within two years to provide borrower assistance or remediation, or to provide funding for housing counseling. Fed Release.