Policy Round-Up: Citigroup

Written by

Nakia Gladden
Nakia Gladden

Citigroup, one of the nation’s biggest banks, has agreed to pay $7 billion to settle claims brought on by the Justice Department because of its participation in the housing crisis. After a federal investigation lead by Attorney General Eric Holder, the bank admitted to deceiving consumers and engaging in risky subprime mortgages.

DOMINIC RUSHE OF THE GUARDIAN STATES:

“The agreement comes after months of tense negotiations and comes as Justice Department continues to negotiate a similar settlement with [rival] Bank of America.”

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

“Citigroup admitted to many of its misdeeds “in great detail” the Justice Department said. According to a statement of facts released by the government, and agreed by the bank, Citigroup executives ignored their own warnings and misrepresented the quality of the subpar mortgages they were selling to investors.”

For the full article visit theguardian.com

THE WALL STREET JOURNAL’S ANDREW GROSSMAN AND CHRISTINA REXRODE:

“The Justice Department said that when a third-party “due diligence vendor” turned up a significant portion of mortgages that were found to be low-grade, such as missing key documents or made to borrowers with poor credit, the bank often chose not to reject the loans. Instead, Citigroup engaged in a sleight of hand, in which it reclassified the loans as better-performing, the Justice Department said, and then misrepresented their quality to investors.”

“”Citigroup employees often personally ordered the due diligence firms to change the loan grades…from reject to accepted,” said U.S. Attorney John Walsh of Colorado, whose office helped lead the investigation.”

Read the full article here

ACCORDING TO REUTER’S ANDREW KELLY, THE JUSTICE DEPARTMENT IS PURSUING BANK OF AMERICA AS WELL:

“Bank of America Corp has been negotiating with the Justice Department over similar claims, though those talks have stalled in recent weeks amid a multibillion dollar difference in proposed penalties.”

“”We’re not letting up, and we’re not going away,” Tony West, the Justice Department’s No. 3 official, said in announcing the Citigroup deal.”

“”We will continue to pursue these cases,” he said, adding that related announcements could come “in the very near future.””

Read the full article at reuters.com

LATEST FROM Nakia Gladden

RELATED ITEMS (BY TAG)