Credit Suisse Estimates US Fines and Other Litigation Costs of $104 Billion

FT Alphaville reports the doubling of Credit Suisse's estimate for US litigation costs from last year to this, from $58B to $104B.  Of this, only $69B has been reserved to date.  US regulators are looking for substantially higher penalties for misconduct on the part of banks than in the past, and many European banks are expected to be severely penalized for many actions. Credit Suisse breaks down its reserves into seven areas, as can be seen in the article.

The WSJ reports that litigation costs have been a part of US bank stress testing but have not been captured in European stress tests.  That is now changing as the European Central Bank and European Banking Authority are both concerned with the potential scope of the costs.  The EBA has asked individual countries to look at "conduct risk" as part of their stress testing.  The ECB takes over the role of European banking supervisor on November 4 from national regulators.  Based upon CS's litigation costs equaling about half of the losses from the financial crisis, the ECB will be kept quite busy in its new role.