Fines & Penalties Monitor: January 2017

February 21, 2017 at 6:01 PM


In January, our large bank group – the 18 largest institutions headquartered in the U.S. and E.U. – reached one settlement and one fine, bringing total fines, penalties, and settlements to $500 million.  This time last year, our bank group incurred $10 billion in penalties, all relating to Residential Mortgage-Backed Securities.

Deutsche Bank AG was fined $425 million by the New York Department of Financial Services for failing to identify a money laundering scheme by Russian customers.  The regulator alleged that bank allowed customers to launder approximately $10 billion out of Russia.  The chief administrative officer of Deutsche Bank stated that the bank has improved its anti-money laundering controls, including hiring more people to its anti-financial crime department.

Also this month, JPMorgan Chase & Co. agreed to pay a total of $55 million to settle a Department of Justice investigation over accusations that the bank discriminated against minority borrowers.  The lawsuit alleged that JPMorgan-affiliated mortgage brokers charged at least 53,000 black and Hispanic borrowers about $1,000 more for a mortgage loan than white borrowers with the same credit and risk profiles between 2006 and 2009.  JPMorgan no longer relies on third-party agents to broker loans and has denied any wrongdoing in the matter.

January 2017 marks not only the beginning of a new year, but the start of a new U.S. administration. This makes the volume of future fines, penalties, and settlements slightly harder to predict. A few things are clear – decisions related to activities leading up to and during the financial crisis will continue to drive our fines, penalties, and settlements total, as in the previous two years. Scrutiny of sales incentives and practices, brought on by the Wells Fargo scandal in September 2016 will also remain. Beyond that, there are more questions than answers.

Just like last year, we will be tracking new fines, penalties, and settlements of over $50B assessed at the largest banks on a monthly basis. Summaries of previous activity can be found here and here.  Readers interested in more detail on these kinds of events may want to consider a subscription to CPG’s Risk Events Monitor.

Eileen Sullivan

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