Bank of America and Citigroup are two banks that are still struggling from the four-year economic downturn, while others have turned their businesses around. Both banks recently reported that 2012 fourth-quarter earnings are down due to the high cost of litigation resulting from substantial settlements within their mortgage businesses. BofA and Citigroup have been barraged with lawsuits claiming that investors were sold shoddy mortgage-backed securities.

Ballard Spahr consumer financial services partner Christopher J. Willis stated, "Mortgage-related litigation is at an unprecedented high," and banks still face the specter of claims from prosecutors, investors, and insurers related to more than $1 trillion worth of residential mortgage-backed securities. Future profits of such financial institutions are at stake as they seek to find ways to cut expenses—including job elimination.

Related Practices

Bank Regulation and Supervision
Business and Finance
Consumer Financial Services
Mortgage Banking