The Barclays settlement is one of the lower payouts made by banks facing such claims, with Credit Suisse agreeing in December 2016 to pay out a combined $5.3 billion in settlements and consumer relief, while Deutsche Bank settled for $7.2 billion in January previous year.
United States federal authorities have faced public outrage and hostile scrutiny from lawmakers over the perceived failure to bring criminal cases against any senior bank executives for their roles in sparking the crisis - despite a Justice Department finding that industry practices involved widespread fraudulent conduct.
Barclays was accused of misleading investors over the quality of loans behind the deals.
The agreement settles a civil action filed in December 2016 in which the USA sought civil penalties for alleged conduct related to Barclays' underwriting and issuance of residential mortgage-backed securities (RMBS) between 2005 and 2007.More news: Brighter, warmer today, rain chances tonight
He added: "This settlement reflects the ongoing commitment of the Department of Justice, and this office, to hold banks and other entities and individuals accountable for their fraudulent conduct".
Barclays Capital Inc. has agreed to a $2 billion settlement of federal charges related to the company's underwriting and issuance of residential mortgage-backed securities (RMBS) between 2005 and 2007. Deutsche Bank paid $7 billion earlier this year.
Barclays, unlike rival banks facing similar claims by the Justice Department, was sued in December 2016 after resisting a penalty proposed in initial settlement negotiations.More news: Buhari's Word's Cannot Reverse Party Decision - Rep
Menefee, who was the head banker on Barclays's subprime RMBS securitizations, "has always maintained that the government's FIRREA lawsuit against him was baseless", his lawyers said in a statement, referring to the statute under which the case was brought. The DoJ said more than half of the mortgages defaulted.
Chief executive Jes Staley said: "I am pleased that we have been able to reach a fair and proportionate settlement with the Department of Justice".
Pre-tax profits rose 10% to £5.3bn for 2017, but the bank reported an after-tax loss of £1.9bn.
"Putting significant legacy matters like this one behind us means Barclays is well positioned to produce stronger earnings going forward, and to start returning a greater proportion of those earnings to our shareholders", Staley noted in a statement. But Barclays wanted to pay much less, $1.5 billion to $2 billion, according to various media reports. Barclays shares edged down after the announcement.More news: Who's That Girl? Kylie Jenner Reveals Shocking Post-Baby Makeover