HSBC Holdings plc (ADR) (HSBC)’s bill for the Financial Crises: $550 million

HSBC Holdings plc (ADR) (NYSE:HSBC), the global banking and financial services institutions has settled with the Federal Housing Finance Agency for $550 million dollars. Bloomberg‘s Trish Regan reported the news on Street Smart.

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 HSBC Holdings plc (ADR) (NYSE:HSBC), as we all know was not the first and perhaps not the last financial institution either to have picked up the bill for the 2007-2008 financial crises. In fact Trish reported that it was the 17th such institution. How many more are they going to be, still remains to be answered.

The fine was in direct connection to HSBC Holdings plc (ADR) (NYSE:HSBC)’s settlement of claims for the residential Mortgage Backed Securities (MBS). It is still unclear as to whether the damage caused by the bank was of equal or even less magnitude as the amount on its bill, namely $500 million portrays. What is even more baffling is the question that does this paltry sum, which might cast a dent in the financial institutions’ quarterly earnings or may be this year’s annual income,  monetize the social distress caused to families who had to evacuate their homes owing to foreclosures? FHFA certainly thinks that it does.

As details of HSBC Holdings plc (ADR) (NYSE:HSBC)’s extent of involvement remain undisclosed the amount of bill is the clue that can shed some light on this subject. To put things into context, JPMorgan Chase & Co. (NYSE:JPM) had settled for a far greater amount , almost ten times of HSBC Holdings plc (ADR) (NYSE:HSBC)’s bill, late last year.

FHFA’s crackdown certainly sends a reverberating message throughout the banking industry that irresponsible actions will not be forgiven and there will be consequences. It is another reason for  bankers not to get carried away in the moment and be critical of their actions. Financial institutions are central to our economy and standard of living. Lapse of judgement on their part could put all of us at risk.

Disclosure: none