Block on Trump's Asylum Ban Upheld by Supreme Court
Another one bites the dust. Earlier this year J.P. Morgan and the DOJ reached a $13 billion settlement, and yesterday U.S. Attorney General Eric Holder announced that the DOJ and Citigroup have reached a settlement regarding federal investigations of mortgage securities.
The $7 billion settlement is much more than the $363 million Citi initially offered, and a bit more than half of the $12 billion the DOJ countered with, reports The Wall Street Journal. Let's take a look at the settlement in more detail.
According to the Settlement Agreement's Statement of Facts, from a period of 2006 to 2007, Citigroup sold residential mortgage-backed securities ("RMBS"), the great majority of which after due diligence revealed "did not conform to the representations provided to investors about the pools of loans to be securitized." Of course, because of this, and the actions of other banks, the great recession of 2008 happened.
Monday, Eric Holder announced the settlement which will have the following breakdown: $4 billion paid as a penalty to the DOJ; $2.5 million to help consumers; and $500 million for states' attorney generals and the FDIC, reports The New York Times. The settlement agreement excludes, among other things, any criminal actions against Citigroup and any individual claims against Citigroup employees.
Interestingly, "Citigroup acknowledged it made serious misrepresentations to the public -- including the investing public -- about the mortgage loans it securitized in RMBS." In a statement, Eric Holder stated: "The bank's misconduct was egregious. And under the terms of this settlement, the bank has admitted to its misdeeds in great detail. The bank's activities shattered lives and livelihoods throughout the country and around the world. They contributed mightily to the financial crisis that devastated our economy in 2008." He added, "Today, we hold the bank accountable for this wrongdoing - which had devastating ripple effects that cascaded through economies and financial institutions across the globe."
Which bank is next in Holder's line of sight? Bank of America ("BofA"). Though negotiations had already begun between the DOJ and BofA, they were put on hold while the Citigroup negotiations went underway, reports The New York Times. BofA is claiming that it was pressured to purchase Merrill Lynch, and now does not think it should be liable for the "mortgage problems by its Merrill Lynch unit" says the Times. Based on Citigroup and J.P. Morgan, we don't think Holder will buy this argument.
We'll keep you posted.
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