NYAG $500mn Settlement RBS

On 6 March, NYAG fined RBS $500mn for misconduct leading to crisis.

  • Settlement with Royal Bank of Scotland for deceptive practice, misrepresentation.

Alleged Violations

  • Bank used deceptive practices with packaging, marketing, sale, issuance of RMBS.
  • Diligence vendors warned RBS of securitization loans failed underwriting standard.
  • Number of mortgage loans backing RBS RMBS, had loan-to-value ratio over 100%.
  • After finding problem, RBS kept buying and securitizing loans from the originators.
  • Loan pools backing the securitizations, suffered billions of dollars collateral losses.
  • Investors had shortfalls in principal and interest payments, fall in certificate value.


  • Settlement $100mn for NYS; $400mn in relief for NYers affected by housing crash.
  • RBS to provide NYers, with funds to spur construction of more affordable housing.
  • Other resources to help communities transform code enforcement systems, invest
    in land banks and purchase distressed properties to keep predatory investors away.
  • Independent compliance monitor responsible for ensuring that the targets are met.
  • RBS admits selling RMBS backed by mortgage loans which did not meet guidelines.
  • Contrary to representations, did not materially comply with underwriting guideline.