The dispute between the U.S. Department of Justice and Deutsche Bank (NYSE: DB) didn’t last far into 2017 before being resolved. Both parties announced that they have finalized a settlement over the German lender’s misconduct in relation to the sale of mortgage-backed securities in the years leading up to last decade’s financial crisis. The company will pay $7.2 billion over a period of five years to put the matter to rest: $4.1 billion in relief for affected customers, and a $3.1 billion civil monetary penalty.
Although that total amount is high — in a press release, Deutsche Bank said it represents “a financial burden for us” — it is well below the original $14 billion the Justice Department said it was seeking when it lowered the boom last September. After a series of negotiations, the amount was whittled down to the agreed level.
Both sides were palpably relieved at the agreement. In its press release on it, Attorney General Loretta Lynch said the settlement “holds Deutsche Bank accountable for its illegal conduct and irresponsible lending practices, which caused serious and lasting damage to investors and the American public.”
“Deutsche Bank did not merely mislead investors: It contributed directly to an international financial crisis,” Lynch added.
For his part, Deutsche Bank CEO John Cryan said “We are pleased to have resolved this matter. We had to invest a vast amount of time and energy in these negotiations, and the resolution of this matter creates a lot more certainty.”
Nevertheless, he also sounded a contrite note. “The conduct [cited by DoJ] … falls short of our standards and is unacceptable. We apologize unreservedly for it. We have subsequently exited many of the underlying activities and comprehensively improved our standards,” Cryan said.
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Deutsche Bank Settles with Feds for $7.2 Billion
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