Credit Suisse Pays $495M in Mortgage-Backed Securities Settlement

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Image copyright: Reuters

The Facts

  • Credit Suisse has agreed to settle a case brought by the New Jersey Attorney General in 2013 for $495M, wrapping up a years-long case related to residential mortgage-backed securities (RMBS) and the 2008 financial crisis.

  • The New Jersey Bureau of Securities originally sought $3B in damages, alleging the bank offered $10B in shoddy mortgage securities from 2006-2007 while "misrepresenting risks of the investments."

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The Spin

Narrative A

Between multiple failed investments and legal settlements, Switzerland's second-largest bank is running out of solutions as its capital funds and public relations continue to deteriorate. Credit Suisse isn't quite on the brink of total collapse, but the bank has absorbed virtually every negative blow possible, and it’s close to the edge.

The Motley Fool

Narrative B

Credit Suisse's sharp and rapid decline could provide a silver lining, as Middle Eastern sovereign wealth funds may capitalize on the bank's current low valuation. If these funds do choose to invest, Credit Suisse could begin to rebuild its business and remake its public image.

Finance