Citi to pay record penalty to settle mortgage securities suit

Bank accepts $4B fine as part of $7B deal with Justice Department

TRD New York /
Jul.July 14, 2014 01:20 PM

Citigroup struck a deal with the U.S. Justice Department yesterday that will see the bank pay $7 billion to settle a federal probe into faulty mortgage securities marketed prior to the recession.

About $4 billion of the cash will go to the Justice Department, thus setting a record for penalties. Borrowers struggling with mortgages would receive roughly $2.5 billion, and the state attorneys general and the Federal Deposit Insurance Corporation would each get $500 million. U.S. authorities had asked for $10 billion last month, which led to stalled negotiations.

“The bank’s misconduct was egregious,’’ Attorney General Eric Holder said in a statement provided to the New York Times. “As a result of their assurances that toxic financial products were sound, Citigroup was able to expand its market share and increase profits.”

The probe into the bank is part of a larger task force that’s investigating whether faulty mortgage securities had a role in fueling the housing boom that eventually collapsed in 2008, as previously reported. [NYT]Mark Maurer


Related Articles

arrow_forward_ios
Caliber CEO Sanjiv Das (iStock)

Lone Star affiliate reaches $17M settlement with NY homeowners

Lone Star affiliate reaches $17M settlement with NY homeowners
Citigroup CEO Michael Corbat (Credit: Getty; iStock)

Doublewide cubicle? Citigroup eyes suburban offices so workers can spread out

Doublewide cubicle? Citigroup eyes suburban offices so workers can spread out
Letitia James (Credit: Timothy A. Clary/AFP via Getty Images, iStock, Pixabay)

Real estate was among top consumer gripes in 2019

Real estate was among top consumer gripes in 2019
From left: 1578 Union Street in Brooklyn, Daniel Melamed (inset) and Eric Schneiderman (Credit: Google Maps, Getty Images, Facebook)

Overzealous investigators went too far in pursuit of Brooklyn landlord, appellate court rules

Overzealous investigators went too far in pursuit of Brooklyn landlord, appellate court rules
Nightingale’s Eli Schwartz and 111 Wall Street (Credit: Google Maps)

Nightingale partnership closes on $175M purchase of 111 Wall

Nightingale partnership closes on $175M purchase of 111 Wall
Extell Development chairman Gary Barnett with 555 Tenth Avenue and 524 East 14th Street (Credit: Barnett by Anuja Shakya, 555ten and StreetEasy)

Extell scores $700M refi for three Manhattan buildings

Extell scores $700M refi for three Manhattan buildings
Anna Castelini and 601 Lexington Avenue (Credit: LinkedIn and Andrew Moore via Flickr)

DeKalb Market Hall creator bringing new food hall to Midtown

DeKalb Market Hall creator bringing new food hall to Midtown
Wells Fargo, JPMorgan Chase and Citigroup each recorded a rise in second quarter profits in their consumer divisions (Credit: iStock)

Banks see uptick in mortgages, but remain wary ahead of potential Fed interest rate cut

Banks see uptick in mortgages, but remain wary ahead of potential Fed interest rate cut
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...