Deutsche Bank (DB) and the U.S. Department of Justice have yet to reach a settlement over allegations about the way that the German lender packaged toxic mortgages leading up to the 2008 financial crisis. According to The Wall Street Journal, The DOJ wants the bank to pay $14B. Deutsche Bank, however, said it has no plans to pay “anywhere near the number cited” and sees that figure as a starting point in negotiations.
In a statement, the firm said that it expected the final figure to be much lower and closer to what other banks have paid over similar allegations. InvestmentNews reports that it has not been uncommon for the DOJ in its investigation into MBSs to first put forward higher penalties than the eventual settlement that is reached.
Other firms and their deals over their mortgage lending activities include Bank of America (BAC) for $16.7B, Citigroup (C) for $7B, JPMorgan Chase (JPM) for $9B, Goldman Sachs (GS) for $5.1B, and Morgan Stanley (MS) for $3.2B. Goldman Sachs admitted to wrongdoing when it settled claims that it did not properly vet MBS before selling them as quality debt to investors.
According to CNN, Deutsche Bank has put aside about $6.2B. In the wake of news that the government was seeking $14B, the bank’s stock dropped 7% in after hours trading.
Aside from the US government’s probe, Deutsche Bank is also the subject of regulatory investigations and lawsuits over allegations involving precious metals trading, foreign currency manipulation, and the mis-selling of subprime loans.
US Wants Deutsche Bank to Pay $14B Over Toxic Mortgages, CNN, September 16, 2016
Deutsche Banks is Close to Settling Its Mortgage Case, Fortune, September 9, 2016