DOJ warns big banks of future lawsuits

by Ryan Smith17 Jul 2014
The Justice Department on Wednesday put big banks on notice Wednesday that failure to admit misconduct and pay stiff penalties over shoddy mortgage-bond sales would result in litigation by the government.

Speaking before a financial policy group in Washington, Associate Attorney General Tony West took a veiled swipe at Bank of America, which is currently in tense negotiations with the DOJ.

“Resolving these cases will require more than simply seeking a meeting with the attorney general,” said West, referring to Bank of America CEO Brian Moynihan’s rejected bid to sit down with Eric Holder. “It will require taking true responsibility for misconduct that contributed to the Great Recession.

“If an institution is unwilling to admit its wrongful conduct in a statement of facts; or balks at paying a substantial penalty that reflects that conduct; or refuses to do right by those affected, then we will not shrink from litigating as long as we must to fulfill our law enforcement mandate,” West added.

West’s remarks came the day after BOA offered nearly $13 billion to settle government claims that its Merrill Lynch unit sold shoddy mortgage-backed securities during the run-up to the financial crisis. Earlier this week, Citigroup agreed to shell out $7 billion to settle similar claims.

“Let me be clear: We do not investigate these matters intending to settle them,” he said. “I would not be surprised if we were to see additional RMBS lawsuits in the future.”
 

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