It is now more than seven years since the housing crisis hit, and settlements over claims of selling toxic residential mortgage-backed securities are still alive and well. Earlier this month, Goldman Sachs settled for 5 billion dollars with U.S. Department of Justice and several regulators and the FHFA is seeking billions in damages from Royal Bank of Scotland over sales of toxic RMBS to Fannie Mae and Freddie Mac.
The latest RMBS settlement occurred in Virginia when the Commonwealth’s attorney general announced that 11 financial institutions have agreed to collectively pay more than 63 million dollars to resolve claims that the banks misrepresented the quality of certain RMBS they sold to the Virginia Retirement System. Among the institutions to settle are Countrywide/Merrill Lynch, Royal Bank of Scotland, Barclays Capital, Morgan Stanley, Citigroup, Goldman Sachs, and HSBC.
While the Federal Reserve saw enough improvement in the economy to raise the short-term interest rates in December, the Conference Board reports that the economy actually lost momentum at the end of the year. The Conference Board’s Leading Economic Index dropped by zero point 2 percent in December down to 123 point 7 after increasing by half a percentage point in both October and November. Analysts say a drop in housing starts was a factor in December’s slight decline.