Regulation

FHFA settles with Barclays for $280 million over allegedly toxic securities

fhfaThe Federal Housing Finance Agency (FHFA) announced last week that Barclays will pay $280 million to settle allegations that the bank knowingly sold toxic mortgage-backed securities to mortgage giants Fannie Mae and Freddie Mac without disclosing the nature of the securities.

Under the terms of the settlement—the 11th litigation settlement related to 18 lawsuits filed by the FHFA in 2011—Barclays will pay $227 million to Freddie and $53 million to Fannie.

The FHFA, which has been the conservator for Fannie and Freddie since 2008, and Barclays are also required to file a joint dismissal within one business day of Fannie and Freddie’s receipt of settlement payments.

Last week’s settlement brings the total obtained by the FHFA to more than $16 billion. To date, the FHFA has settled with General Electric, Citi, UBS, JPMorgan Chase, Deutsche Bank, Ally Financial, Morgan Stanley, Societe Generale, Credit Suisse, Bank of America, Merrill Lynch and Countrywide Financial.

Additionally, Wells Fargo agreed to settle similar claims late last year in a non-litigation settlement worth over $335 million.

Currently, the FHFA has open cases against First Horizon National, Goldman Sachs, HSBC, Nomura and RBS. The FHFA said in a release that the agency “remains committed to satisfactory resolution of the remaining actions.”

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