New York Attorney General Eric T. Schneiderman this week announced a $500 million settlement between the state and Royal Bank of Scotland. The settlement relates to claims that the bank misled investors over the quality of risky mortgage-backed securities leading up to the 2008 financial crisis.
New York and Schneiderman have led the charge in pursuing action against financial institutions they allege have engaged in deceptive practices, securing some $3.7 billion in cash and consumer relief since the financial crisis.
In a statement, Attorney General Schneiderman said, “While the financial crisis may be behind us, New Yorkers are still feeling the effects of the housing crash. Home values plummeted. Vacant homes consumed neighborhoods. And for many New Yorkers, affordable housing fell out of reach. Today’s settlement is another important step in our comprehensive effort to help New Yorkers rebuild their lives and communities. I am proud of the extraordinary housing programs these settlements have funded across New York, from Brookhaven to Buffalo—and today’s settlement will fund even more community revitalization initiatives for years to come.”
The six-figure settlement includes a $100 million cash payment to the state of New York and $400 million in consumer relief for homeowners and affected communities. The relief efforts will include funds to help promote affordable housing initiatives, as well as funds “dedicated to helping communities transform their code enforcement systems, invest in land banks, and purchase distressed properties to keep them out of the hands of predatory investors.” An independent monitor will be appointed to ensure RBS’ compliance with the terms of the settlement.
“We have been very clear that putting our remaining legacy issues behind us is a key part of our strategy,” said RBS CEO Ross McEwan in a media statement. “Settling these issues is a stark reminder of the heavy price we continue to pay for the global ambitions pursued by the bank in the run up to the crisis.”
As reported by the Wall Street Journal, RBS has previously reached similar settlements with the Securities and Exchange Commission, the Federal Housing Finance Agency, and states including California and Connecticut. Another settlement may be looming between RBS and the U.S. Justice Department.