And You Thought Your Legal Fees Were High...Banks' Legal Fees Top $103 Billion After Housing Bubble Burst
Provided by HG.org
If you have ever complained about your legal fees, or been reluctant to hire an attorney because you did not think you could afford it, just be glad you are not one of the six largest US Banks recovering from the collapse of the housing market and resulting financial crisis. Bloomberg reports that together, they have amassed a whopping $103 billion in legal costs since the beginning of the Great Recession.
Led by JP Morgan Chase & Co. and Bank of America, the big 6 banks have accumulated more than $103 billion in legal costs since the financial crisis began. That amount equates to more than all dividends paid to shareholders by all of those banks in the past five years, and more than the combined profits of all of the big 6 banks in 2012.
According to Bloomberg, about 40% of these expenses arose since January 2012. Banks and financial experts are warning that the tally may climb significantly in the waning months of 2013 and beginning of 2014 as regulators, prosecutors, and investors press new foreclosure claims.
JP Morgan and Bank of America accounted for about 75% of the total costs. JP Morgan devoted $21.3 billion to legal fees and litigation since the start of 2008, more than any other lender, and added $8.1 billion to reserves for mortgage buybacks.
These expenses have not only been incurred in prosecuting foreclosure cases, however. A growing segment of these fees relate to claims by borrowers and investors that banks misled buyers of mortgage-backed securities, rigged interest rates used to price loans worldwide, improperly transferred mortgages in violation of securities laws, and manipulated markets for credit derivatives and commodities. Some believe investigators may step up prosecution of claims against the banks for these improper practices as the economy recovers and the solvency of US banks is no longer as seriously in question.
Legal fees and litigation costs accounted for $56 billion of the $103 billion tally, with $7.2 billion incurred just for the first six months of this year. The rest, $47 billion, was for payments to mortgage investors. Bank of America alone increased its legal costs by $3.3 billion in the first half 0f 2013 to a total of $19.1 billion while JP Morgan added $1.5 billion over the same period. Citigroup, the third-largest bank, added $1.4 billion in legal expenses this year, almost double its costs for the first half of 2012.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
According to Bloomberg, about 40% of these expenses arose since January 2012. Banks and financial experts are warning that the tally may climb significantly in the waning months of 2013 and beginning of 2014 as regulators, prosecutors, and investors press new foreclosure claims.
JP Morgan and Bank of America accounted for about 75% of the total costs. JP Morgan devoted $21.3 billion to legal fees and litigation since the start of 2008, more than any other lender, and added $8.1 billion to reserves for mortgage buybacks.
These expenses have not only been incurred in prosecuting foreclosure cases, however. A growing segment of these fees relate to claims by borrowers and investors that banks misled buyers of mortgage-backed securities, rigged interest rates used to price loans worldwide, improperly transferred mortgages in violation of securities laws, and manipulated markets for credit derivatives and commodities. Some believe investigators may step up prosecution of claims against the banks for these improper practices as the economy recovers and the solvency of US banks is no longer as seriously in question.
Legal fees and litigation costs accounted for $56 billion of the $103 billion tally, with $7.2 billion incurred just for the first six months of this year. The rest, $47 billion, was for payments to mortgage investors. Bank of America alone increased its legal costs by $3.3 billion in the first half 0f 2013 to a total of $19.1 billion while JP Morgan added $1.5 billion over the same period. Citigroup, the third-largest bank, added $1.4 billion in legal expenses this year, almost double its costs for the first half of 2012.
Copyright HG.org - Google+
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
