(Updates with details of other litigation facing Credit Suisse)
By Nate Raymond and Silke Koltrowitz
NEW YORK/ZURICH, March 21 Credit Suisse Group AG
has agreed to pay $885 million to resolve claims by a
U.S. regulator that the Swiss bank misled Fannie Mae
and Freddie Mac into buying mortgage-backed securities
that later went sour.
The settlement announced on Friday would resolve claims in
two lawsuits filed in New York by the Federal Housing Finance
Agency (FHFA), the conservator since 2008 for the
government-controlled mortgage companies.
It is the ninth settlement that the FHFA has reached in
litigation that began in 2011, when it filed 18 lawsuits over
some $200 billion in mortgage-backed securities, an investment
product at the center of the recent global financial crisis.
The accord resolves claims pending in New York federal court
against Credit Suisse over $16.6 billion of securities sold to
Fannie and Freddie, and ends what the Swiss bank called the
largest mortgage-related investor litigation it still faced.
Credit Suisse will pay $234 million to Fannie Mae and $651
million to Freddie Mac, the FHFA said.
So far, the FHFA has recovered more than $10.1 billion from
banks over similar securities.
This includes nearly $9.8 billion in settlements of
litigation with such banks as JPMorgan Chase & Co,
Citigroup Inc, Deutsche Bank AG, Morgan Stanley
and Societe Generale.
The FHFA also reached a separate $335.2 million accord with
Wells Fargo & Co, which it did not formally sue.
Many of the settlements were reached after a series of
series of court rulings that went against the banks.
Lawsuits remain pending against several other banks,
including Bank of America Corp, Credit Suisse Group AG
and Royal Bank of Scotland Group Plc.
Credit Suisse said on Friday it will reduce previously
reported fourth-quarter and 2013 results by 275 million Swiss
francs ($311.17 million) after taxes for the settlement,
resulting in a fourth-quarter net loss of 8 million Swiss
While Credit Suisse said the settlement resolves the biggest
mortgage case it faced, the bank still must deal with other
mortgage cases in the United States, including ones by the
National Credit Union Administration and attorneys general in
New York and New Jersey.
Credit Suisse is also one of 14 Swiss banks targeted by U.S.
prosecutors for helping wealthy Americans evade taxes. The bank
has said it is trying to settle that matter.
Last month, the Zurich-based bank agreed to pay $196.5
million and admit wrongdoing to settle U.S. Securities and
Exchange Commission charges that it provided unregistered
brokerage and investment advisory services to U.S. clients.
The case is Federal Housing Finance Agency v. Credit Suisse
Holdings (USA) Inc. et al, U.S. District Court, Southern
District of New York, No. 11-06200.
($1=0.8838 Swiss francs)
(Reporting by Nate Raymond and Silke Koltrowitz; Editing by
Elaine Hardcastle, Stephen Powell and Peter Galloway)