The Risks of the Mortgage Mess: The Banks’ View


HSBC (HBC) got plenty of attention when it disclosed that it had suspended foreclosures in its annual report Monday. But its annual report — as well as other big banks’ reports — also contained plenty of additional nuggets about the mortgage mess, especially in the risk disclosures, which are required to be written in plain English and to include “the most significant factors that may adversely affect the company’s business, operations, industry, financial position or future financial performance.”

I waded through the recently filed annual reports from Bank of America (BAC), JPMorgan Chase (JPM), Citigroup (C), Wells Fargo (WFC) and HSBC to see how each institution framed the threat that the mortgage mess and the foreclosure crisis pose to their businesses.

You’d expect to see plenty of similarities. After all, in general, the risks are well-known and common to all of those banks. For example, investors could force the banks to buy back securities; law-enforcement investigations could be costly; foreclosure problems could increase costs and losses; and lawsuits of every type could crop up.

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