Banks were penalized this year in the U.S. with record fines of over $10.7 billion for irregularities ranging from money laundering to Iran, to interest manipulation and house foreclosures, under dubious circumstances.
UBS Swiss group paid the largest fine – the bank recently agreed to pay U.S. authorities $1.2 billion to close the investigation into the handling of the Libor index. The index affects the interest rate on loans of hundreds of trillions of dollars worldwide, from consumer loans to financing for huge corporations.
Slightly more than half of these fines against banks in the U.S. were caused by mortgage irregularities. Most of the proceeds were distributed to assist the owners that were targeted by the banks, according to CNN Money. U.S. authorities have created in the spring a fund for compensating individuals and families foreclosed by banks under flawed circumstances, with funding of $1.5 billion coming from financial industry fines. Other $3.5 billion collected also from banks went to federal and state authorities in the U.S. to fund financial counseling and legal services for people who have or want to get a mortgage.
Investors who were victims of Bernard Madoff will be compensated in the amount of $210 million collected from Bank of New York Mellon, which directed customers to his Ponzi scheme.
Almost half of the fines, representing over $5 billion remained in U.S. Treasury accounts. This amount includes $3.2 billion paid by HSBC and other banks after an investigation into transactions with entities originating from countries under economic embargo, such as Cuba and Iran, which included charges of money laundering.
U.S. authorities have raised approximately $1.5 billion from UBS and Barclays for interest manipulation and another $335 million from Deutsche Bank and a U.S. mortgage lender for selling mortgage packages without risk identification.
Almost all irregularities penalized this year were committed before 2012. Other fines will follow for problems occurred this year such as the huge loss of $5.8 billion from JPMorgan Chase or allegations of fraud that led to the collapse of Peregrine Financial Group.
According to Thomson Reuters estimates, financial sector companies listed on the New York Stock Exchange and included in the S & P 500 have achieved this year profits totaling $167.7 billion, 21% higher than in 2011. The amount does not include the profit of big foreign banks with active in the U.S. such as UBS, HSBC and Deutsche Bank. The shares of the big banks fined this year went up by 20%.
Reply