| Goldman Sachs’ recent $270 million settlement with an Illinois electrical workers pension fund brought the total tab of big bank settlements for credit crisis and mortgage problems to $132.15 billion, according to a new analysis from SNL Financial.
That figure represents an increase of $3.72 billion over SNL’s last estimate in August of 2014. The firm has measured total settlements across the six largest bank holding institutions, counting cash paid out by JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley.
Goldman’s most recent settlement stems from charges that it defrauded investors as to the safety of $6 billion in residential mortgage-backed securities purchased in 2007 and 2008. SNL said Goldman recently raised its cost estimate for current legal proceedings to $5.9 billion in excess of reserves, from its previous estimate of $3.8 billion, according to its Aug. 3 Form 10-Q.
SNL also said that Wells Fargo marginally boosted its anticipated litigation costs to $1.4 billion from $1.2 billion in the prior quarter, and Morgan Stanley bore the brunt of recent settlement costs. It agreed to pay $2.6 billion in a settlement with the U.S. Justice Department and the U.S. Attorney’s Office in Northern California in February, ultimately causing Morgan Stanley to increase its legal reserves by $2.8 billion.
JPMorgan Chase was hit with more than $969 million in documented fines this year, SNL also noted.
SNL said that its analysts also examine the amount of loans that are “put back” after being sold by the originating bank. In addition to litigation reserves, as of the first quarter of 2015, the six largest bank holding companies reported a combined $13.19 billion in representation-and-warranty reserves for one- to four-family mortgage loans sold or securitized, largely unchanged from $13.34 billion in the linked quarter, SNL said.
The firm said that in 2014, the largest six bank holding companies repurchased approximately $2.10 billion in closed-end one- to four-family loans previously sold, compared to $15.22 billion in 2013 and $7.81 billion in 2012.
