WASHINGTON — The U.S. Justice Department accused Barclays Bank PLC of selling risky mortgages it knew would fail, defrauding investors in the run-up to the housing collapse.
Barclays “repeatedly deceived investors†about the quality of the residential mortgage-backed securities, the complaint said. More than half of the loans in the bonds defaulted, according to the DOJ, citing $31 billion in deals made between 2005 and 2007.
The company misled investors by overstating the creditworthiness of mortgage borrowers and the value of their homes, and aggressively pushed the sale of the mortgage bonds before the home loans started defaulting, according to Friday’s filing in U.S. District Court in Brooklyn, N.Y.
Barclays told investors it had weeded out loans that were high-risk. The Justice complaint called the bank’s assurances “a sham.â€
The packaging and sale of high-risk residential mortgage-backed securities injured tens of thousands of investors and “significantly contributed to the financial crisis of 2008,†Principal Deputy Associate Attorney General Bill Baer said in a press release. “Millions of homeowners were left with homes they could not afford, leaving entire neighborhoods devastated.â€
London-based Barclays rejected the DOJ claims and said it would ask the court to dismiss the case.
“The claims made in the complaint are disconnected from the facts,†company spokeswoman Brittany Berliner said in an emailed statement. “We have an obligation to our shareholders, customers, clients, and employees to defend ourselves against unreasonable allegations and demands.â€
Eight years after the housing collapse, several big financial firms continue to fight accusations of mortgage and investor fraud. Deutsche Bank and Credit Suisse are said to be closing in on settlements with the Department of Justice. Others, including Goldman Sachs and Morgan Stanley, have settled.
Barclays affiliates were named in today’s complaint, as were former bank executives Paul Menefee, Barclays’ onetime head banker for subprime mortgage bonds, and John Carroll, who was the head subprime loan trader.
The case is U.S. v. Barclays Capital Inc.
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December 23, 2016 at 01:05AM
Στο:World News Tagged: #articles, #Europe, #policynews
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