Citigroup faces lawsuit if it doesn’t cough up $10B

Citigroup’s bid to settle a probe into the handling of the bank’s mortgage-backed bonds right before the 2008 financial crisis is running into trouble.

The U.S. Justice Department wants Citibank to pay $10 billion to put an end to its investigation. But the DOJ halted talks with Citibank on June 9 after the lender offered to pay less than half the request — just shy of $4 billion. Now, prosecutors are prepared to sue the bank as early as next week.

The bank is one of at least eight financial institutions under Justice Department scrutiny for allegedly misleading investors about the quality of securities backed by mortgages.

The Justice Department also broke off talks with Bank of America on June 9 after the bank offered to pay only $12 billion of the $17 billion requested.

Credit Suisse Group and Wells Fargo are among the other banks currently facing investigation. [Bloomberg] — Sasha von Oldershausen