Seeking Alpha

HSBC faces $1.6B payout over mortgage bonds

  • HSBC (HBC) faces having to pay $1.6B in a lawsuit from the Federal Housing Finance Agency over soured mortgage bonds that the bank sold to Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB). The bank made the disclosure yesterday.
  • The figure is well above the $900M that analysts at Credit Suisse had estimated.
  • In total the FHFA has sued 18 banks over mortgage bonds; should HSBC's calculations for its liabilities be applied to some of the defendants with the largest exposure, including Bank of America (BAC), JPMorgan (JPM) and RBS (RBS), they would have to pay over $7B each. Should these banks make payments in proportion with a recent UBS deal, the bill would above $4B.
Comments (11)
  • philipmax
    , contributor
    Comments (250) | Send Message
    Do these money awards go to FNMA or FMCC? No! They go to the Treasury!
    If so, why are stockholder punished twice?
    Firstly the Gov't takes their stock, ostensibly because it substituted US money for banks' fraud.
    Secondly, when it already confiscated F&F income, it also takes the award money.
    The Gov't took the stock, takes all the income, and when F&f are made whole by the banks, it takes that away as well.
    Pretty good deal for gov't, anyone else tries this trick, it's jail time for them.
    6 Aug 2013, 07:53 AM Reply Like
  • nahsa
    , contributor
    Comments (20) | Send Message
    You're right on both points.
    1. It may be entirely possible that FNMA would not have had any trouble had they not been defrauded. What it seemingly boils down to is that FNMA and FMCC were financial sponsors of these "banksters" who got away clean and left the bag to f&f.


    2. On the second point, we are not sure how the government can unilaterally alter a written or implied contract.



    Obama's announcement to be made today is a stunning example of his failure in leadership. I voted for him, and can say I am thoroughly disappointed in the failure of promise his leadership could have brought.
    6 Aug 2013, 10:11 AM Reply Like
  • jackooo
    , contributor
    Comments (1489) | Send Message
    Obama can do most anything with his executive order program.
    6 Aug 2013, 12:45 PM Reply Like
  • Blitztour
    , contributor
    Comments (52) | Send Message
    Just listened to Donovan’s comments and it's the same garbage!
    They don't have a plan or a clue how to replace Fannie or Freddie and the banks won't touch it with a 10' pole!
    But even if they were somehow encouraged to start writing mortgages I still can’t phantom how they continue to refer to this as a "reduction of taxpayer exposure".
    When the next crises hits and the banks as they start to fold, will tax payers not take that hit as well? I mean, what is FDIC in place is for?
    The banks are the ones who sold this crap to F&F and it was all rated AAA by the S&P!
    6 Aug 2013, 10:45 AM Reply Like
  • gwynfryn
    , contributor
    Comments (3886) | Send Message
    Bl, I can't phantom, either (but I guess you've fathomed that out?)!
    6 Aug 2013, 11:36 AM Reply Like
  • Blitztour
    , contributor
    Comments (52) | Send Message
    Thank you for the correction ( I have to stop depending so much on spellceck)
    6 Aug 2013, 02:16 PM Reply Like
  • gwynfryn
    , contributor
    Comments (3886) | Send Message
    You're welcome; they can be good for a laugh: I just spotted one in one of my posts; "shoed" instead of "showed", ha!
    7 Aug 2013, 06:40 AM Reply Like
  • herschfields
    , contributor
    Comments (95) | Send Message
    Great comments,,,,,,,,,,,Thanks
    6 Aug 2013, 11:02 AM Reply Like
  • pankaj123
    , contributor
    Comments (84) | Send Message
    If AAA rated GSE like F & F can fail and investors loose their money what is guarantee that another GSE housing insurance co will not fail and again investors will not loose money? I believe no matter how hard politicians try they will loose in court,and when they will see it coming they will start buying F & F to make money for themselves.
    6 Aug 2013, 12:50 PM Reply Like
  • nahsa
    , contributor
    Comments (20) | Send Message
    I think it's all about confidence.


    Confidence in management.
    Confidence in the integrity of the notes.
    Confidence in the borrowers.


    When we had all three, f&f fulfilled their mandate and investors were rewarded....and the tax payers were never at risk.


    Remove those confidence factors and yo have the mess we now find ourselves in.


    If Obama had one molecule of creative intervention circulating through his bloodstream he would realize this and take appropriate action instead of pimping for the market makers.


    Step 1. Have the AG file federal fraud charges against the banks that defrauded...oops...too late they made their deal.
    Step 2. Remove all perks to retired management and their pensions until all skeletons are exposed.
    Step 3. Review all seriously behind borrowers and re-classify their debt to the appropriate "pool."
    Step 4. Give all first time homers opportunity to assume bad loans which have adjusted to real home values...if they qualify.


    Yes it's a lot of work.....
    6 Aug 2013, 04:22 PM Reply Like
  • damien.wrl
    , contributor
    Comment (1) | Send Message
    Hasn't anyone picked up on this yet. The Americans are raking in billions in settlements from loads of the multinationals, think BP has three current multi billion pound suits in the pipe line.
    If we could raise this sort of money NHS would be funded for years.
    6 Aug 2013, 05:25 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio: