RBS to Pay $5.5 Billion in FHFA Mortgage-Bond Settlement
- Deal clears a hurdle for U.K. government to cut its stake
- Penalty is the biggest after Bank of America’s $9.3 billion
Rows of houses stand in Las Vegas.
Photographer: Jacob Kepler/BloombergThis article is for subscribers only.
Royal Bank of Scotland Group Plc agreed to pay $5.5 billion to settle the second of three major U.S. mortgage-backed securities probes the government-owned lender must overcome before it can fully return to the private sector.
The accord between the British bank and the U.S. Federal Housing Finance Agency is the second-biggest the FHFA has extracted and, according to a statement, is to settle a lawsuit alleging RBS sold faulty mortgage bonds to Fannie Mae and Freddie Mac from 2005 to 2007. RBS must still reach a deal with the U.S. Department of Justice on a separate investigation into similar claims, which could be even more costly if the precedent set by American banks is followed.