Barclays to pay $2B to settle fraud claims from 2000s housing crisis

Barclays Pays $2bn To Settle Fraud Case

Barclays to pay $2B to settle fraud claims from 2000s housing crisis

Barclays plc (BARC.L, BCS) agreed to pay $2 billion or 1.420 billion pounds in civil penalties to settle an investigation by the U.S. Department of Justice into its marketing of residential mortgage-backed securities between 2005 and 2007.

The final deal is lower than the $5 billion sum that the USA authorities had asked Barclays to pay earlier in negotiations, as reported back in 2016.

Before the Barclays deal, the US regulators had already fined several major banks more than $50 billion over their dealings in mortgage-backed securities.

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

The justice department alleged violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, based on postal, wire and bank fraud as well as other misconduct.

Barclays chief executive Jes Staley said it was a "fair and proportionate settlement" and it is likely to be seen as a vindication of his decision to play hardball with USA authorities.

The Justice Department has also settled with two former Barclays executives, who were sued for fraud after the bank balked at paying the amount sought by the government in negotiations.

The settlement "is an important step in recognizing the harm that was caused to the national economy", Richard Donoghue, U.S. attorney for the Eastern District of NY, said in statement.

Mr Staley said by "putting significant legacy matters" behind it as well as completing its restructuring previous year, Barclays was "well positioned to produce stronger earnings going forward". Deutsche Bank paid $7 billion earlier this year.

Barclays has agreed to pay $2bn (£1.4bn) to settle a lawsuit brought by the United States government over the sale of mortgage-backed securities.

Home mortgages were typically bought up, bundled into a security and sold to investors with the promise of lucrative returns. The DoJ said more than half of the mortgages defaulted.

The settlement makes Barclays the latest major bank to be sanctioned for crisis-era fraud almost a decade after the collapse of major NY financial institutions dealing in mortgage-backed derivatives sparked a global recession. It also racked up £2.5bn of losses from the sale of Barclays Africa.

As a result, Barclays still meant to pay a dividend of 6.5p for 2018, he added.

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