The U.S. Justice Department sued Barclays Plc for fraud over its sale of mortgage bonds after the bank balked at paying the amount the government sought in settlement negotiations, Bloomberg News reported today. The lawsuit announced yesterday is rare for big banks, which typically negotiate a settlement with the government rather than risk drawn-out litigation and a possible trial. The breakdown in talks suggests that the bank is willing to take its chances with incoming enforcement officials in the Trump administration. The bank has lined up a law firm whose top lawyer is known for his aggressive defense of clients, including Lt. Col. Oliver North. Barclays is one of a handful of European lenders, including HSBC Holdings Plc, Credit Suisse Group AG, UBS Group AG and Royal Bank of Scotland Group Plc, that have yet to settle long-running U.S. probes into their sale of mortgage bonds ahead of the financial crisis. The Barclays lawsuit marks the first time the Justice Department has sued one of the banks at the center of an Obama administration initiative to recoup investor losses on the securities. The U.S. has extracted more than $46 billion from six U.S. financial institutions thus far, and on Friday Deutsche Bank AG said it reached a $7.2 billion agreement to resolve the investigation into its mortgage bond dealings.
