Credit Suisse completes $5.3 billion U.S. deal over toxic debt
Credit Suisse Group and the Justice Department finalized a $5.3 billion agreement to settle a U.S. investigation into the bank’s sales of toxic mortgage debt before the financial crisis.
Credit Suisse will pay a $2.5 billion civil penalty and $2.8 billion in consumer relief, to be paid over five years after the settlement, the Justice Department said Wednesday, in line with the bank’s Dec. 23 announcement of a preliminary resolution. As part of the settlement, the bank conceded that it sold investments containing loans that it knew were likely to fail.
The Zurich-based bank has said it plans to take a pretax charge of about $2 billion in the fourth quarter, on top of existing reserves, to account for the settlement.
“Credit Suisse made false and irresponsible representations about residential mortgage-backed securities, which resulted in the loss of billions of dollars of wealth, and took a painful toll on the lives of ordinary Americans,” Attorney General Loretta Lynch said in a written statement.
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