The U.S. Treasury Department is facing another major debt crisis after an investigation found it violated the law by delaying payments to lenders that owe money.
The department was forced to suspend the payment of about $500 million in loans from the Bank of America Corp. and Wells Fargo & Co. to a variety of banks as it sought to settle outstanding cases with the U.K.’s Royal Bank of Scotland Ltd.
The Treasury Department said Monday it was seeking to settle all outstanding cases against the bank, which it accused of deliberately overstating interest rates and failing to adequately cover costs.
The department’s investigation found that the bank had not adequately disclosed the fact that it had already paid $5.7 billion in penalties and interest to U.N. inspectors and that it should have disclosed that it owed more than $3 billion to U:U.S.-based foreign governments.
The government said it would pay the loans, plus interest, in full.
The UBS Group AG, a Swiss bank, agreed to pay $2.6 billion to settle a lawsuit over a $3.5 billion loan to China.
In a separate case, the Treasury Department found that U.C.L.A. violated the Foreign Corrupt Practices Act by failing to report a $1.5 million loan to a Chinese company and another $1 million to a Nigerian-owned company as a direct result of a civil suit that accused the company of laundering money to finance its illegal mining operations.
The U.CCPA requires the Treasury to take action to resolve complaints against U.
Cs. financial institutions, including payments to creditors, and said the agency was looking into whether it had taken steps to avoid future violations of the law.