UBS fined for mortgage mis-selling

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UBS is paying a 700 million Swiss francs ($745 million) fine to settle a case over its mis-selling of mortgage-backed securities to Fannie Mae and Freddie Mac in the US

The US Federal Housing Finance Agency brought the case against UBS in 2011, saying the bank made misleading statements and did not conduct full due diligence when it sold $4.5 billion in these securities to the government-backed mortgage financiers.

The assets were sold by UBS between 2004 to 2007, as the US housing bubble was growing.

When it burst in 2008 Fannie Mae and Freddie Mac had to be rescued by the US government.

They discovered that they held billions of dollars in non-performing assets that were backed by bad mortgages.

The settlement announced yesterday still needs approval by both sides before it is finalised.

This UBS deal with the Federal Housing Finance Agency is the latest in a string of legal settlements.

In late 2012, the bank announced $1.5 billion in penalties after admitting to fraud in its role in the Libor scandal.

In 2009, the bank paid $780 million after admitting to helping US taxpayers hide money from the IRS.

• A state judge has ruled that Michigan governor Rick Snyder overstepped his authority by approving the city’s bankruptcy filing.

A judge in Ingham County ruled that Snyder’s action had violated the state constitution because it cut the pension benefits of retired public employees.

The judge, Rosemarie Aquilina, said pensions were protected under state law, and issued an order that the bankruptcy filing be withdrawn.

However, her ruling was immediately challenged by Michigan’s attorney general, who has appealed to the state’s Court of Appeals on the grounds that the Chapter 9 bankruptcy filing stayed all legal proceedings related to Detroit’s debt obligations.

Lee Saunders, President of the American Federation of State, County and Municipal Employees union, welcomed the judge’s ruling and condemned the subsequent challenge, saying: ‘There is too much at stake to play political games with the hard-earned retirement security of Detroit’s public workers.’