Deutsche Bank AG is nearing an agreement with the U.S. Department of Justice to settle a long-running investigation into its mortgage-backed securities business.
The bank is in talks "concerning a potential settlement of claims that the DOJ may consider bringing, based on its investigation of Deutsche Bank’s residential mortgage-backed securities origination and securitization activities," the firm said Wednesday in its second-quarter earnings report.
Germany’s biggest bank has paid more than $9 billion in fines and legal settlements worldwide since the start of 2008, according to data compiled by Bloomberg. That includes settlements related to violations of U.S. sanctions, rigging of interest-rate benchmarks and allegations that it defrauded U.S.-backed mortgage issuers Fannie Mae and Freddie Mac.
U.S. authorities have already extracted more than $44 billion in fines from other banks for their role in creating and selling subprime mortgage bonds that helped spur the 2008 financial crisis. Goldman Sachs Group Inc. said in April it will pay $5.1 billion to resolve U.S. allegations that it failed to properly vet mortgage-backed securities before selling them to investors as high-quality debt.
Royal Bank of Scotland Plc said earlier this year that it was also in settlement talks with the U.S. for its handling of mortgage securities. The firm is expected to pay a multi-billion dollar penalty, according to analysts.
The U.S. government’s mortgage-backed security resolutions stem from a working group of prosecutors and other officials that President Barack Obama ordered up in 2012 to punish Wall Street for fueling the financial crisis with bonds linked to souring mortgages. Until then, the Justice Department had been pilloried for years for not having brought significant cases against banks and their executives.