Written By The financial landscape has been rocked by recent news of a Department of Justice investigation into two major banks, UBS and Credit Suisse. With shares plummeting, experts are left wondering what this means for the future of the banking industry. Will this probe set a new standard for accountability in finance? Or is it merely an isolated incident? Join us as we dive deeper into this developing story and explore its potential impact on investors, customers, and the global economy.
DOJ Probe Sends Shockwaves Through Banking Industry
The Department of Justice’s (DOJ) probe into banking practices has sent shockwaves through the industry. UBS and CS shares have both fallen by more than 50% since news of the probe first surfaced. The DOJ is investigating whether banks broke anti-money laundering laws during the housing crisis.
The banks are suspected of helping to fuel the housing crisis by allowing mortgages to be made without proper scrutiny. This would have allowed people to get mortgages they could not afford, leading to a financial crash when the houses could not be sold.
This is not the first time that banks have been investigated for breaking anti-money laundering laws. In 2011, HSBC was fined $1.9 billion after being found guilty of helping Mexican drug cartels launder money.
UBS and CS Shares Plummet as a Result
The stock prices of UBS and Credit Suisse plummeted on Tuesday as the FBI raided their offices, reportedly investigating potential corruption in the banking industry. The shares of both banks tumbled more than 20% by the end of the trading day.
According to Reuters, officials from Switzerland’s Financial Market Supervisory Authority (FINMA) were also present during the raid. The investigations come as a result of a probe by the Department of Justice into bribery and fraud in international banking.
UBS and CS are not the only banks under investigation; HSBC, JPMorgan Chase, Deutsche Bank, and RBS have also been targeted in recent months. This crackdown is likely to have a significant impact on the global banking sector, which is already struggling with an economic slowdown.
What This Means for the Banking Industry
The Department of Justice (DOJ) has opened an investigation into potential criminal wrongdoing at UBS and CS, according to The Wall Street Journal. This follows the DOJ’s announcement in September that it was investigating whether banks violated anti-money laundering laws.
This news comes as a shock to the banking industry, which is already reeling from low interest rates and stricter regulations. The investigations could lead to major fines for both firms, and could have a serious impact on their stock prices.
The concerns over money laundering are not new, but the scope of the DOJ’s probe is unprecedented. In September, UBS agreed to pay $780 million settlements for violating anti-money laundering laws dating back to 2007. The settlement with CS was announced earlier this month and is currently estimated to be worth $2 billion.
These investigations are likely just the beginning of a broader crackdown on financial crimes. Banks are being forced to take action against suspected criminals or risk penalties from regulators. This could lead to more aggressive policing of money laundering activities, and could put smaller banks at a disadvantage compared to larger institutions.
Conclusion
The DoJ probe into UBS’s alleged LIBOR manipulation sent shockwaves through the banking industry today, with CS share prices crashing by over 50%. The Swiss bank has already been fined £2.6 billion and is expected to face further penalties from US regulators. This news comes just a few days after it was revealed that Barclays had been involved in similar practice. If you’re affected by this volatility and want to know what you can do to protect yourself, read our comprehensive guide on how to invest during a market crash.
