March 29 (UPI) — Barclays agreed Thursday to pay $2 billion to settle a civil lawsuit by the U.S. Department of Justice over the British bank’s issuance of residential mortgage-backed securities.
Federal investigators said Barclays fraudulently misled investors about the quality of loans backing the securities. The Justice Department said the bank violated the Financial Institutions Reform, Recovery and Enforcement Act though mail fraud and wire fraud.
Under the scheme, Barclays issued 36 residential mortgage-backed securities to cover more than $31 billion worth of loans. More than half defaulted.
“The actions of Barclays and the two individual defendants resulted in enormous losses to the investors who purchased the Residential Mortgage-Backed Securities backed by defective loans,” Federal Housing Finance Agency Inspector General Laura Wertheimer said. “Today’s settlement holds accountable those who waste, steal or abuse funds in connection with FHFA or any of the entities it regulates.”
The lawsuit also named two former Barclays executives — Paul Menefee and John Carroll — who, together, agreed to pay a sum of $2 million to settle the allegations.
“I am pleased that we have been able to reach a fair and proportionate settlement with the Department of Justice,” Barclays CEO Jes Staley said. “It has been a priority for this management team from the start to resolve these historic issues in a timely and appropriate manner wherever possible.”