The Barclays suit claims the bank “securitised billions of dollars of loans it knew had material defects” and had also financed lenders that it knew were issuing mortgages to customers who would be unable to repay them, according to the prosecution.
The loans in question defaulted “at exceptionally high rates early in the life of the deals”.
The deal was reached ahead of the arrival of the Trump administration and its expected change of personnel.
According to the FT, Deutsche Bank and Credit Suisse have also agreed to pay out billions to resolve a probe into the alleged mis-selling of mortgage-backed securities at the height of the US housing bubble.
After months of its negotiations with the DoJ, Deutsche said it had reached a $7.2bn deal with US authorities.
Germany’s biggest bank had agreed “in principle” to pay a $3.1bn civil penalty and also provide $4.1bn in relief to consumers, over time.
The consumer relief portions of the settlements will typically be far less painful for the banks than the straight payments since they are paid out over a period of years and not in cash.
