Finance

Barclays Finalizes Mortgage Securities Probe with $2 Billion Settlement

Barclays Finalizes Mortgage Securities Probe with $2 Billion Settlement

The United States has reached agreement with Barclays Capital, Inc. and several of its affiliates (together, Barclays) to settle a civil action filed in December 2016 in which the United States sought civil penalties for alleged conduct related to Barclays' underwriting and issuance of residential mortgage-backed securities (RMBS) between 2005 and 2007.

American prosecutors fined Barclays $2 billion yesterday as the bank agreed to settle claims that it fraudulently mis-sold toxic mortgage products before the financial crisis.

Richard Donoghue, United States Attorney for the Eastern District of NY, said: "This settlement reflects the ongoing commitment of the Department of Justice, and this Office, to hold banks and other entities and individuals accountable for their fraudulent conduct".

Last month, Britain's Serious Fraud Office announced charges against Barclays Bank over emergency fundraising from Qatar during the financial crisis - adding to charges against parent company Barclays PLC and four former top executives.

After three years of research, department that led Loretta Lynch determined that Barclays caused billions in losses with a network that allowed it to offer active investors low-quality debt, which ended up going to pique when It collapsed housing market.




Chief executive Jes Staley said: "I am pleased that we have been able to reach a fair and proportionate settlement with the Department of Justice".

The agreements mark the latest in a string of US settlements with major banks over sales of tainted mortgage securities from 2005 to 2007 that helped set the stage for the real estate crash that contributed to the financial crisis. "We are proud to have partnered with the U.S. Department of Justice and the U.S Attorney's Office for the Eastern District of NY on this matter".

The Justice Department originally sued Barclays and several of its USA affiliates in late 2016 over the sale of risky mortgage-backed securities. At the time, Barclays has said that it would "vigorously defend" the case.

"Today's settlement holds accountable those who waste, steal or abuse funds in connection with FHFA or any of the entities it regulates", she said. Barclays was one the last holdouts of the big banks. "Solely to put this matter behind him, Mr. Menefee has agreed to a settlement in which he has not admitted any wrongdoing".

The bank lied about the creditworthiness of borrowers whose loans underpinned the securities and who then defaulted at "exceptionally high rates", the statement said.


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