Home > Finance, Law > Legal Costs for Major U.S. Banks Exceed $100 Billion

Legal Costs for Major U.S. Banks Exceed $100 Billion

Thursday, August 29th, 2013 Leave a comment Go to comments

According to Bloomberg, the U.S.’s six largest banks have accumulated legal costs of $103 billion so far since the financial crisis. Legal fees and litigation costs account for $56 billion and the rest is for payments to mortgage investors. Interestingly, the sum of the banks’ legal costs is equivalent to spending $51 million a day, enough to erase everything the banks earned for 2012.

JPMorgan’s (JPM) legal bill is $21.3 billion and it has allocated $8.1 billion for mortgage buybacks. Similarly, Bank of America’s (BAC) legal expenses are $19.1 billion and it has set aside $28.6 billion for repurchases since 2008. The other banks included in Bloomberg’s report subject to significant legal bills are Citigroup (C), Wells Fargo (WFC), Goldman Sachs (GS), and Morgan Stanley (MS).

Bloomberg also noted the following:

The legal process could be extended if the U.S. attorney general brings more cases and unearths information that can be used in new lawsuits. While some cases have a five-year statute of limitations, those involving bank frauds have a deadline that’s twice as long. The Financial Institutions Reform, Recovery and Enforcement Act, known as FIRREA, has a 10-year limit, and the U.S. used the law against JPMorgan and Bank of America.

“It’s likely the financial institutions don’t yet know of some of these lawsuits,” said Walter J. Mix III, head of financial-institutions consulting at Berkeley Research Group LLC and a former commissioner of the California Department of Financial Institutions. “The litigation can go on for 10 years or more.”

Source: U.S. Bank Legal Bills Exceed $100 Billion (Bloomberg)

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