Deutsche Bank AG has agreed in principle with the U.S. Justice Department to settle an investigation into its sale of residential mortgage-backed securities in the U.S. The German bank, subject to the negotiation of definitive documentation, will pay a civil monetary penalty of $3.1 billion and provide $4.1 billion in consumer relief in the U.S. Deutsche is likely to see pretax charges of about $1.17 billion in the fourth quarter due to the penalty. The potential $7.2 billion deal is about half the sum regulators had initially sought.

Credit Suisse Group AG is also settling in principle with the DOJ for $5.28 billion — a $2.48 billion civil monetary penalty and $2.8 billion in consumer relief — over similar allegations. The Swiss bank expects to book a pretax charge of about $2 billion on top of its existing reserves in the fourth quarter.

In a related case, the DOJ sued U.K.-based Barclays Bank Plc and several of its U.S. affiliates over accusations of fraud in the sale of RMBS in the run-up to the financial crisis.

The Wall Street Journal says the "dramatic back-to-back announcements" reflect DOJ officials' urgency to wrap up pending investigations of precrisis activity at major banks before President-elect Donald Trump takes office. Sources say there is plenty of uncertainty regarding what the Trump administration would do with pending cases.

In other banking news, Bison, Kan.-based Bison State Bank and Kansas City, Mo.-based First Mortgage Solutions LLC have agreed to merge. First Mortgage Solutions owner and operator Ryan Wiebe will receive 51% of the bank's outstanding stock.

Bend, Ore.-based Cascade Bancorp secured the approval of another of its shareholders — Mark Vassallo and related investment vehicles — to vote in favor of the company's pending sale to Billings, Mont.-based First Interstate BancSystem Inc. A similar agreement was also reached with an investor group affiliated with Wilbur Ross.

In Pennsylvania, Prudential Bancorp Inc. and Polonia Bancorp Inc. have adjusted their merger consideration. The exchange ratio and per-share cash consideration for the transaction have been adjusted to 0.7460 and $11.09, respectively. The initial merger consideration consisted of either 0.7591 of a share of Prudential common stock or $11.28 in cash for each Polonia share.

DBRS has confirmed all ratings of Bank of Hawaii Corp. and unit Bank of Hawaii, reflecting the company's "strong and defensible banking franchise" particularly within Hawaii, and its "solid earnings generation capacity and strong balance sheet fundamentals." The trend for all ratings is still stable.

Elsewhere, software engineers at hedge fund Bridgewater Associates LP are secretly working on developing a technology, called the "Book of the Future," that would "enshrine [founder Ray Dalio's] unorthodox management approach in a software system," according to the WSJ. It is "like trying to make Ray's brain into a computer," an employee familiar with the project says. Dalio envisions Bridgewater automating its day-to-day management, including hiring, firing and other strategic decision-making.

Money manager Steve Eisman is super-bullish for the U.S. banking sector under the Trump administration. "This is the first time we've overweighted [banks] since the financial crisis," he told the Financial Times.

In the credit union space, Paul Yang, who previously served as CEO of Los Angeles-based University Credit Union, has joined Anchorage, Alaska-based Credit Union 1 as president and CEO.

Karen Schenck, former CEO of Corry Area Schools Federal Credit Union, pleaded guilty to stealing more than $741,000 through false loans and deposits and making unauthorized withdrawals from members' accounts at the credit union, CUToday reports. Scheduled to be sentenced in April next year, she may face a prison term of up to 30 years, along with a $1 million fine.

In other parts of the world

Asia-Pacific: Bank of China HK to sell Chiyu Bank stake; Chinese-led group wins PSX stake bid

Europe: A bank fails; 2 insurers decide to merge; US DOJ now pursues Barclays

Middle East & Africa: Tunisian bank rescue rules; Ugandan insurers' takaful tryst

Latin America: Brazil lowers 2017 growth forecast; Santander Mexico declares cash dividend

The day ahead

Early morning futures indicators pointed to a lower opening for the U.S. market.

In Asia, the Hang Seng dropped 0.28% to 21,574.76.

In Europe as of midday, the FTSE 100 was up 0.03% to 7,065.69, and the Euronext 100 had climbed 0.06% to 929.40.

On the macro front

The new home sales report, the consumer sentiment report and the Baker-Hughes Rig Count report are due out today.

The Daily Dose is updated as of 7:30 a.m. ET. Some external links may require a subscription.