Another bank settles lawsuit over mortgage-backed securities
Société Générale has agreed to pay $122 million to settle a lawsuit by a U.S. regulator accusing the bank of misleading Fannie Mae and Freddie Mac in the purchase of mortgage-backed securities.
The settlement, announced by the Federal Housing Finance Agency (FHFA) on Thursday, marked the eighth to date by the FHFA, which in 2011 filed 18 lawsuits over some $200 billion in mortgage-backed securities that were at the heart of the 2008 financial crisis.
The deal, which resolves a case over $1.3 billion in securities, was the latest reminder of the continuing mortgage liabilities facing banks.
Some the largest headaches have been the cases by the FHFA, which has acted as conservator for Fannie and Freddie since their government takeover in 2008.
The deal with Paris-based Société Générale follows Morgan Stanley's agreement earlier this month to pay $1.25 billion to resolve a similar case by the FHFA.
(Read more: FreddieMac gets (some) money back from Lehman)
The FHFA reached a separate $335.2 million settlement with Wells Fargo & Co over mortgage securities without filing a lawsuit.
The settlement is "already substantially reflected in an existing specific reserve for this matter," Société Générale said in a statement. The bank on Feb. 12 said it had set aside about 700 million euros (US$960 million) at year-end for litigation.
"The settlement will have no material impact on the group's earnings," Société Générale said Thursday.
Litigation remains pending against several other banks, including Bank of America, Credit Suisse Group, and Royal Bank of Scotland Group, Bank of America's Merrill Lynch is scheduled to go to trial first on June 2.
The case is Federal Housing Finance Agency v. SG Americas, Inc. et al, U.S. District Court, Southern District of New York, No. 11-06203.