Judge Sums Up Banks' 2008 Behavior in 8 Words

'The magnitude of falsity, conservatively measured, is enormous'
By John Johnson,  Newser Staff
Posted May 12, 2015 8:25 AM CDT
Judge Sums Up Banks' 2008 Behavior in 8 Words
A man is reflected on a sign board of a Nomura branch in Tokyo.   (AP Photo/Shizuo Kambayashi)

If you had to name two banks guilty of selling lousy mortgage packages during the financial meltdown of 2008, it's doubtful you'd tick off the names Nomura Holdings of Japan and the Royal Bank of Scotland. But as Reuters reports, a federal judge yesterday declared that both lied through their teeth when selling their deals to the government-owned entities of Fannie Mae and Freddie Mac. US District Judge Denise Cote of Manhattan, who decided the case on her own, framed it in straightforward terms in a line that Wall Street critics will love:

  • “The magnitude of falsity, conservatively measured, is enormous.”

Other banks such as Goldman Sachs and Bank of America opted to settle rather than go to trial, with Nomura and RBS the first two to do so. Legal experts tell the New York Times that they might have been less worried about their reputations taking a hit in the US because they were foreign banks. Nomura plans to appeal, with no word yet from RBS. The ruling puts the banks on the hook for about $500 million in penalties, though that's only about half of the original claim by the government, reports Bloomberg. (Read more Federal Housing Finance Agency stories.)

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