Dec 22, 2016
US sues Barclays for fraud over crisis-era loans
Federal prosecutors have sued Barclays and two of its executives over allegedly fraudulent mortgage-backed securities the bank issued as the US housing bubble was at its peak. People close to the Barclays board said it had been prepared only to agree a settlement that was in proportion with those already reached by its US rivals, and was willing to go to court to fight more costly US demands. The US government is charging the defendants with violations of the Financial Institutions Reform, Recovery, and Enforcement Act, via mail fraud, wire fraud, bank fraud and other misconduct. Barclays prioritised its relationships with loan originators over protecting the investors who bought its mortgage-backed securities, the lawsuit alleges. In 2007, the DoJ alleges, Barclays executives decided that checking the quality of loans originated by New Century was a waste of time since any defective ones could not be forced back on to cash-strapped issuers.
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