Deutsche Bank, Credit Suisse agree to pay $12.5 billion to settle U.S. mortgage cases

Deutsche Bank agrees to pay U.S. $7.2 billion to settle suit — (Image credit: Dan Kitwood/Getty Images)

On Friday, Germany's Deutsche Bank agreed to pay $7.2 billion to settle a U.S. Justice Department lawsuit over dodgy mortgage-backed securities packaged and sold from 2005 to 2007. The settlement, which still needs final approval, includes $3.1 billion in fines and $4.1 billion in relief to consumers, primarily through modifying loans and providing other assistance to homeowners and borrowers. The settlement is a partial relief for Deutsche Bank, which had earlier said it might have to pay up to $14 billion to settle the civil charges. Also on Friday, Credit Suisse agreed to pay $5.3 billion in a similar settlement, and the Justice Department filed suit against Britain's Barclays Bank for allegedly misrepresenting the value of the loans it sold investors.

The mortgage-backed securities, much riskier than advertised, played a large role in the 2007-08 global financial meltdown. Other banks that have already settled with U.S. regulators include JPMorgan Chase ($13 billion), Bank of America ($16.7 billion), and Goldman Sachs ($5.1 billion).

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Peter has worked as a news and culture writer and editor at The Week since the site's launch in 2008. He covers politics, world affairs, religion and cultural currents. His journalism career began as a copy editor at a financial newswire and has included editorial positions at The New York Times Magazine, Facts on File, and Oregon State University.