Tag: mortgage-backed securities

S&P Settlement Nets $20 Million for Iowa Pensions

cornfield

On Tuesday, credit rating agency Standards & Poor’s entered a $1.375 billion settlement with 18 states over the alleged inflated ratings it gave mortgage-backed securities which eventually turned toxic.

Iowa will receive $21.5 million, of which $20 million will be distributed among its 5 pension systems.

The distribution is as follows, according to the Des Moines Register:

Iowa’s money will be distributed among public employee retirement systems, specifically, the Iowa Public Employee’s Retirement System will get $10 million; Teachers Insurance and Annuity Association-college Retirement Equities Fund will get $2.5 million; the Peace Officers’ Retirement System will get $2.5 million; the Municipal Fire and Police Retirement System of Iowa gets $2.5 million and the Iowa Judicial Retirement Fund gets $2.5 million.

“We think that’s appropriate because it’s possible that these (systems) had some of these residential mortgage-backed securities … But probably more significantly, because this whole failure by S&P played such a role in the financial downturn, all five funds were affected very significantly,” Miller said. “It’s a good settlement.”

Miller said employees who have these retirement systems may not individually feel the results of this settlement but there will be a greater amount of money in reserves to support retirement checks in the future.

The Justice Department statement on the settlement, which includes a list of the states receiving money, can be read here.

CalPERS, CalSTRS Nab $300 Million From Settlement With S&P in Suit Over Mortgage Ratings

The CalSTRS Building
The CalSTRS Building

It was revealed today that credit rating agency Standards & Poor’s has entered a $1.375 billion settlement with 18 states over the alleged inflated ratings it gave mortgage-backed securities which eventually turned toxic.

CalPERS and CalSTRS are the biggest individual beneficiaries of the settlement; the entities will receive more than $300 million combined.

More from the Sacramento Bee:

CalPERS said it will receive $301 million from S&P. CalSTRS said it will get $23 million.

“This money belongs to our members and will be put back to work to ensure their long-term retirement security,” said CalPERS Chief Executive Anne Stausboll in a prepared statement.

[…]

“S&P played a central role in the crisis that devastated our economy by giving AAA ratings to mortgage-backed securities that turned out to be little better than junk,” said Stephanie Yonekura, acting U.S. attorney for Los Angeles, in a prepared statement. “This historic settlement makes clear the consequences of putting corporate profits over honesty in the financial markets.”

[…]

With the S&P settlement, CalPERS said it has now recovered approximately $900 million in settlements from bad investments made during the bubble. The big pension fund already settled with Fitch but is continuing to press its suit against Moody’s.

The Justice Department statement on the settlement, which includes a list of the states receiving money, can be read here.

 

Photo by Stephen Curtin

Illinois Pensions Get $50 Million From S&P Settlement

Illinois

Credit ratings agency Standards & Poor’s announced a $1.375 billion settlement with 18 states today over the alleged inflated ratings it gave mortgage-backed securities which eventually turned toxic.

Illinois will receive a $52.5 million chunk of that settlement – with most of the money going towards its pension systems.

More from the Chicago Sun-Times:

It won’t solve Illinois’ pension crisis — not by a long shot — but it’s “better than nothing,” state Attorney General Lisa Madigan said Tuesday, announcing a $52.5 million settlement connected to the 2008 economic collapse.

[…]

Madigan’s office sued S&P in 2012, alleging the credit ratings agency “compromised its independence as a ratings agency by doling out high ratings to unworthy, risky investments to increase its profits, while its misrepresentations spurred investors, including Illinois’ pension funds, to purchase securities that were far riskier than their ratings indicated.”

“S&P abandoned its critical role in the years leading up to the economic crisis, blinded by its unyielding desire for profits,” Madigan said during a news conference Tuesday morning at the Thompson Center in the Loop.

The majority of the state’s portion will be reinvested in Illinois’ pension systems, Madigan said. To date, the state has recovered approximately $400 million for losses the state pension systems sustained after investing in mortgage-backed securities, Madigan said.

Though Madigan acknowledged the latest settlement will have little impact on the state’s pension mess, she said it nevertheless sends a message.

The Justice Department statement on the settlement, which includes a list of the states receiving money, can be read here.

Court Dismisses Pensions’ Lawsuit Against BNY For Housing Crash Losses

skyscraper

An appeals court has dismissed a lawsuit brought by a handful of public pension funds against BNY Mellon. The lawsuit stemmed from investment losses on mortgage-backed securities and BNY’s alleged neglect to properly evaluate the quality of the securities.

From BenefitsPro:

The U.S. Court of Appeals for the 2nd Circuit has upheld a lower court’s decision to dismiss a class-action brought by pension funds against BNY Mellon.

Among others, Chicago’s police pension fund and the Grand Rapids, Michigan, city retirement fund sued BNY Mellon over claims related to losses from residential mortgage-backed securities suffered in the wake of the housing market crash.

BNY was trustee to 530 RMBS originated by Countrywide Home Loans. The plaintiffs alleged that BNY Mellon breached its fiduciary and trustee obligations by not overseeing the quality of the home loans built into the securities.

The plaintiffs had sought to build a class of any investors that owned any of BNY’s 530 mortgage securities.

In April of 2012, a U.S. District Court judge for the Southern District of New York granted BNY’s motion to dismiss the case on the grounds that the named plaintiffs had only invested in 26 of the securities, and the pension funds did not have the “standing” to bring claims against securities they didn’t own, according to court documents.

In upholding that decision, the appellate court deterred a much larger class-action, but did say the pension funds could bring claims against the 26 securities they actually invested in.

“In short, the nature of the claims in this case unavoidably generates significant differences in the proof that will be offered for each trust,” wrote Circuit Judge Debra Ann Livingston.

 

Photo by daveynin via Flickr CC License

CalPERS Collects $249 Million in Bank of America Lawsuit

Bank of America

Pension360 has previously reported that CalPERS was due to receive a substantial sum of money from a settlement with Bank of America, stemming from a lawsuit over failed mortgage securities the bank sold investors.

This week, the dollar figure was solidified: CalPERS has announced it will receive a $249.3 million payout from the bank.

More from the Sacramento Bee:

CalPERS said Monday it has received a $249.3 million payment from Bank of America, the result of a settlement over toxic mortgage securities purchased by the pension fund during the housing bubble.

With the Bank of America settlement, the California Public Employees’ Retirement System said it has now recovered more than $500 million from its investments in bad mortgage securities.

“This is money that rightfully belongs to our members for their long-term retirement security,” said CalPERS Chief Executive Anne Stausboll in a prepared statement. “We’re glad that those who misled investors about the risks of mortgage-backed securities continue to compensate our members for their losses.”

In mid-September, CalPERS collected $88 million from Citigroup Inc. over similar investments.

The payout from Bank of America is in line with CalPERS’ earlier estimate of its share of a $16.6 billion settlement the bank made with federal authorities in August.

The full, albeit brief, statement from CalPERS CEO Anne Stausboll:

“This is money that rightfully belongs to our members for their long-term retirement security,” said Anne Stausboll, Chief Executive Officer for CalPERS. “We’re glad that those who misled investors about the risks of mortgage-backed securities continue to compensate our members for their losses. We thank the California Attorney General’s Office and the U.S. Department of Justice for their diligent efforts.”

CalSTRS will also receive $50 million.