United States announces $7.2 billion settlement with Deutsche Bank
WASHINGTON: US officials on Tuesday formally announced a $7.2 billion settlement with the German lender Deutsche Bank, adding to a flurry of last-minute corporate resolutions by the outgoing administration of President Barak Obama.
The announcement by the US Department of Justice came almost a month after the terms of the settlement had been unveiled by the bank itself.
In a statement, the department said the resolution was the largest settlement so far over the conduct of any single entity contributing to the 2008 financial meltdown.
“Deutsche Bank did not merely mislead investors: It contributed directly to an international financial crisis,” US Attorney General Loretta Lynch said in a statement.
The widespread failure of complex securities that re-bundled poor quality mortgages caused successive crises and bankruptcies in the financial sector in 2008, leading to the Great Recession.
In a civil case, US prosecutors said the bank had contributed to the 2008 financial meltdown by misleading investors as it repackaged and sold residential mortgagebacked securities between 2006 and 2007.
The bank will pay a $3.1 billion civil penalty and contribute $4.1 billion to support relief for borrowers and homeowners.
Bank employees accepted blocked out pay stubs which concealed borrower incomes and thus hid their true ability to pay; failed to inform investors that a significant share of borrowers had liens on the properties; and cleared loans that the bank’s diligence team had attempted to block or that were based on fraudulent property appraisals. — AFP