Citigroup could pay $7 billion to settle a U.S. probe into faulty mortgage securities in the run-up to the financial crisis.
Most of the settlement between the bank and the U.S. Department of Justice is expected to be in cash and includes billions that would go toward struggling borrowers, Reuters reported.
The $7 billion figure for Citigroup is higher than analysts predicted. Analysts estimated that Citigroup had about $3 billion set aside in reserve for such a settlement. Last month, Reuters reported that the U.S. authorities asked for $10 billion. Disagreement about a settlement figure stalled negotiations last month.
The probe into the bank — done by U.S. Attorney offices in Brooklyn and Colorado — is part of a larger task force that’s investigating whether faulty mortgage securities had a role in the fueling and ultimate collapse of the housing bubble in the mid-2000s. [Reuters] – Claire Moses