Nomura Holdings and the Royal Bank of Scotland are facing paying a colossal fee after a U.S. judge ruled that both financial institutions made false statements when selling mortgage-backed securities to Fannie Mae and Freddie Mac.
Philippe Selendy, a lawyer for the Federal Housing Financing Agency, gave an estimate of $805 million a day after U.S. District Judge Denise Cote in Manhattan. Even though FHFA expected to collect well over a billion dollars in the ruling, they still accepted the estimate.
What we have seen at Nomura and RBS can only be described as colossal incompetence, ignorance and deceit,” said Philippe Selendy.
Judge Cote’s 361-page ruling, however, was not clear about how much the FHFA will recover. They also acted as the conservator since the government took both Frannie and Freddie back in 2008.
Selendy stated, “The exhaustive opinion of the court, after a full trial on the merits, decisively puts to rest the myth that bankers’ misconduct was not a driving force behind the crisis.”
It wouldn’t be all bad news for the banks. Even though they will have to pay $805 million, they would receive mortgage bonds in advance the worth of $434 million to $479 million.
Many in Wall Street still argue that banks did not generally break the law selling bogus mortgages, but FHFA’s collection of $20 billion of settle allegations from different banks.
Nomura had this for their say, “While Nomura is still reviewing the court’s ruling, it disagrees with the court’s conclusion and intends to appeal the decision.” They added, “Nomura is confident that it was consistently candid, transparent and professional in all of its dealings with Fannie Mae and Freddie Mac and looks forward to bringing its case to the U.S. Court of Appeals.” RBS, however declined to provide a comment or even a word about the current issue.
The 2008 financial crisis was the latest financial plunge the world economy has faced. Banks sold shoddy mortgages when they didn’t have the money themselves. The situation worsened and eventually led to the massive layoffs, foreclosures and shutdowns that Americans and people of other countries faced.
The Lehmann Brothers were the biggest financial institution the recession took down, with several Wall Street companies also followed suit. The economy, so far, has recovered from the disaster. This ruling only proves that those who have done wrong will not escape the long arm of the law.