Dec 23, 2016
Barclays stands its ground against US regulators
There are several theories why Barclays has chosen to break ranks with rivals and fight the US Department of Justice rather than fold to prosecutors' demands to settle allegations of mis-selling mortgage securities before the 2008 financial crisis. Most analysts had estimated that Barclays would be able to settle the case for a civil penalty of about $1bn, based on the amounts already paid by many of its US rivals to resolve similar allegations. While some US banks bet against the RMBS products they sold and kept little if any exposure to them, Barclays told the DoJ that it held the equity tranches of most mortgage securities it issued and so lost money alongside other investors when they went bad. The DoJ has been pushing Deutsche, Credit Suisse and Barclays to agree an omnibus settlement before Donald Trump's inauguration as US president in the third week of January. It is not the first time that Barclays has been willing to stand its ground against US regulators. In May 2016, a US court ruled in favour of Bank of America's appeal against a DoJ penalty of $1.27bn for toxic mortgages sold by Countrywide, which was acquired by BofA in the financial crisis.
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