Page 73 - Bank Case Studies

Mortgage-backed Securities

Barclays paid £1.4bn ($2bn) to settle

its U.S. mortgage-backed securities
fraud case but did not admit liability.

The U.S. had alleged that the bank

had misled investors about the quality

of loans backing the securities in the run-up to the financial

crisis.

U.S. attorney, Richard Donoghue said:

"The substantial penalty Barclays and its
executives have agreed to pay is an important step

in recognising the harm that was caused to the

national economy and to investors in residential

mortgage-backed securities."

Federal prosecutors said that the alleged scheme involved

36 residential mortgage-backed security deals covering

more than $31bn of mortgage loans. Investors had included
credit unions, pension plans, charitable and religious

organisations, university endowments, and financial

institutions. More than half of the mortgages backing the

securities defaulted, the suit alleged.

Barclays chief executive Jes Staley said the bank was

"pleased that we have been able to reach a fair

and proportionate settlement".