RBS
bankers joked about destroying the US housing market after making
millions by trading loans that staff described as “total fucking
garbage”, according to transcripts released as part of a $4.9bn
(£3.8bn) settlement with US prosecutors.
Details
of internal conversations at the bank emerged just weeks before the
10-year anniversary of the financial crisis, which saw RBS rescued
with a £45bn bailout from the UK government.
The US
Department of Justice (DoJ) criticised RBS over its trade in
residential mortgage backed securities (RMBS) – financial
instruments underwritten by risky home loans that are cited as
pivotal in the global banking crash.
It said
the bank made “false and misleading representations” to investors
in order to sell more of the RMBS, which are forecast to result in
losses of $55bn to investors.
Transcripts
published alongside the settlement reveal the attitude among senior
bankers at RBS towards some of the products they sold.
The
bank’s chief credit officer in the US referred to selling investors
products backed by “total fucking garbage” loans with
“fraud [that] was so rampant … [and] all random”. He
added that “the loans are all disguised to, you know, look okay
kind of … in a data file.”
The DoJ
said senior RBS executives “showed little regard for their
misconduct and, internally, made light of it”.
In one
exchange, as the extent of the contagion in the banking industry was
becoming clear, RBS’ head trader received a call from a friend who
said: “[I’m] sure your parents never imagine[d] they’d raise
a son who [would] destroy the housing market in the richest nation on
the planet.” He responded: “I take exception to the word
‘destroy.’ I am more comfortable with ‘severely damage.’”
Full
report:
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