From the Wall Street Journal:
Figure represents government’s opening bid; ultimate settlement could be much lower
The U.S. Justice Department proposed that Deutsche Bank AG pay $14 billion to settle a set of high-profile mortgage-securities probes stemming from the financial crisis, according to people familiar with the matter, a number that would rank among the largest of what other banks have paid to resolve similar claims and is well above what investors have been expecting.
The figure is described by people close to the negotiations between Deutsche Bank and the government as preliminary, and they said it came up in discussions between the bank and government lawyers in recent days. It hasn’t been previously disclosed. Deutsche Bank is expected to push back strongly against it, the people said, and it is far from clear what the final outcome will be.
It is also unclear how much of that amount is proposed to be paid in cash, and how much could be in consumer relief, as past deals have been structured.
The Justice Department routinely opens high-stakes civil settlement talks with a tough posture, posing higher numbers than it might expect eventually to win, even from banks eager to close long-running probes, lawyers involved in current and similar negotiations say.
A Deutsche Bank spokesman responded to questions about a settlement by pointing to a July filing saying that the bank had started negotiations with the Justice Department.
Deutsche Bank hasn’t said what it has set aside in anticipation of a settlement. The bank held €5.5 billion ($6.2 billion) in total litigation reserves as of June 30, and said it expected to set aside more before the end of the year....MORE