Swiss banking giant UBS’s $300M settlement with the U.S. Department of Justice has closed one of the final chapters in Credit Suisse’s mortgage-backed securities saga, a lingering legacy from the financial crisis era. The agreement, announced Monday, eliminates obligations Credit Suisse had carried since a 2017 DOJ settlement tied to misleading investors about the quality of residential mortgage loans bundled into securities.
Mortgage Meltdown Legacy Comes to a Close
Between 2005 and 2007, Credit Suisse packaged hundreds of thousands of risky home loans into securities worth tens of billions of dollars. According to the DOJ, the bank misrepresented the loans’ quality, leaving investors holding toxic assets when the housing bubble burst.
In 2017, Credit Suisse struck a multibillion-dollar deal requiring it to pay a $2.48 billion civil penalty and provide $2.8 billion in consumer relief through mortgage assistance and affordable housing initiatives.
When UBS acquired Credit Suisse in July 2023, it also inherited those burdens. Monday’s deal formally wipes away the remaining consumer relief obligations, freeing UBS from the final weight of the settlement.
