U.S. banks are bickering over how to split the tab of a mortgage settlement, the Wall Street Journal reported, with Wells Fargo telling government officials it should pay less than Bank of America and JPMorgan Chase. The quarrel between the banks looks set to further delay the settlement relating to mortgage irregularities, with negotiations already having exceeded the mid-June deadline set by U.S. officials.
“As time goes on, banks will lose the PR battle,” said Paul Miller, a banking analyst at FBR Capital Markets, warning that investors will find the fighting off-putting. The terms of a settlement, he said, are less important than getting it done.
While all parties have agreed to a framework that would govern how banks meet their obligations once the deal is in place, including principal reductions on certain mortgages, forgiveness of second-lien loans, restitution to borrowers and dealing with foreclosure-related blight, the banks are still contesting tiny elements of the deal, the Journal said.
Wells Fargo said it should be rewarded for having a better track record with risky mortgages than the other two banks. Citigroup is also contending that the settlement should reflect differences between the institutions, saying it has tighter controls on foreclosure practices than the others. [WSJ]