Large global banks' legal tab is poised to soar beyond $100 billion as investors, insurers and municipalities pursue damages for actions tied to the mortgage meltdown, the financial crisis and the rate-rigging scandal, the Wall Street Journal reported today. This month, Citigroup Inc. agreed to pay $730 million to settle claims that it misled investors in four dozen bond and preferred-stock offerings. Deutsche Bank AG cut its 2012 profit target by 60 percent, citing higher U.S. mortgage-litigation reserves. Government-controlled mortgage investor Freddie Mac sued more than a dozen big banks, claiming that they colluded to manipulate the London interbank offered rate. The largest U.S. banks—Citigroup, J.P. Morgan Chase & Co., Bank of America Corp. and Wells Fargo & Co.—together have paid $61.3 billion to settle credit-crisis and mortgage claims over the past three years, according to SNL Financial. Research firm Compass Point Research & Trading LLC estimates that U.S. banks will wind up owing a further $24.7 billion related to the repurchase of faulty mortgage loans.
