Barclays Haggles MBS Fine Down To $2 Billion, Celebrates

No choice but to surrender, eh, Jamie?
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As the inaugural banners were going up in front of the president-elect’s hotel on Pennsylvania Avenue, the world’s banks—those that had not previously cut novelty-sized checks re: mortgage-backed securities, anyway—were falling over themselves to do so before the words “E Pluribus Unum” were torn from the eagle’s beak and replaced by a roll of soiled toilet paper reading, “America First.” Deutsche Bank, RBS and—after a fashionCredit Suisse gladly handed over their billions and scurried back across the Atlantic, hoping that the nuclear winter soon to engulf North America and East Asia would be mild enough to keep doing business.

And while they were doing so, they cast a wary, pitying eye towards Jes Staley and Barclays, who were having a hissy fit over the $5 billion bill Loretta Lynch had just handed them. Silly fools, they thought: You can’t fight the Justice Department. And what if Donald Trump really meant what he said about sticking it to the foreigners, and Jeff Sessions meant what he said when he told the tea partiers that big banks were no friends of his? Too big a risk. Certainly, too big a risk for the already seriously impaired Barclays.

Now, Jes Staley has made mistakes in his life. This was not one of them. For while it looked dicey, but telling the Obama Justice Department to go fuck itself has paid off handsomely for Barclays, which is only paying $2 billion—less than the ding from all the Libor stuff and not even close to the most its ever ponied up to get out of a legal jam, and certainly little enough to allow Staley’s first-ever popular move to go ahead.

The British lender was the only bank to push back against the size of the settlement demanded by the Justice Department, prompting the prosecutor to file a lawsuit in the waning days of the Obama administration in 2016. The DOJ wanted a fine of about $5 billion, but the bank refused to pay any more than $2 billion….

“The settlement came at the bottom end of expectations and much sooner than expected,” said Ian Gordon, an analyst at Investec Plc, who called it a “clear positive” and a “very happy Easter” for the bank…. Big banks typically negotiate a settlement rather than risk a protracted and reputation-damaging courtroom showdown with U.S. lawyers. While Staley chose to fight, JPMorgan Chase & Co. CEO Jamie Dimon said he "had no choice" but to "surrender," agreeing to pay $13 billion to settle similar accusations.

Barclays Wins Its DOJ Gamble With $2 Billion Mortgage Settlement [Bloomberg]
Barclays to Pay $2 Billion to Resolve Mortgage-Securities Claims [WSJ]
Barclays Gets Penalty It Can Live With [WSJ]

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