HSBC settles subprime mortgage claims for $765 mn | THE DAILY TRIBUNE | KINGDOM OF BAHRAIN

HSBC settles subprime mortgage claims for $765 mn

British banking giant HSBC has agreed to pay $765 million to resolve allegations it passed on toxic mortgage securities to investors prior to the global financial crisis, federal prosecutors announced Tuesday. Between 2005 and 2007, HSBC staff knowingly packaged low-grade loan pools with high rates of default into mortgage-backed securities -- despite warnings from its internal risk management team and outside reviewers -- according to the US Attorney’s Office in Colorado.

“HSBC made choices that hurt people and abused their trust,” Bob Troyer, US Attorney for Colorado, said in a statement. “When HSBC saw problems, it chose to rush those deals out the door. When deals went south, investors who trusted HSBC suffered.” Despite reaching the settlement, HSBC disputes the allegations, according to the Justice Department.

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