US demands $10bn from Citi over mortgage bonds

GMT 14:19 2014 Friday ,13 June

Arab Today, arab today US demands $10bn from Citi over mortgage bonds

Citibank branch
New York - AFP

The Justice Department has asked Citigroup for more than $10 billion to settle claims the bank misled investors on mortgage-backed bonds sold before the 2008 financial crisis, a report said Friday.
US prosecutors broke off talks with Citi and are preparing a lawsuit against the bank after the financial giant offered less than $4 billion to settle the case, Bloomberg News reported.
News of the Citi case follows other multi-billion dollar government settlements with major banks over their sale of mortgage-backed securities before the housing bust.
The government has charged that the banks falsely claimed the investment vehicles were low-risk when many were linked to risky mortgages that ended up defaulting. 
JPMorgan Chase in November agreed to pay $13 billion to settle several mortgages suits with the Justice Department. 
Bank of America is reportedly in talks with the Justice Department on a similar deal for $12 billion or more. That would follow a $9.5 billion settlement with the Federal Housing Finance Agency over mortgage-backed securities sold by BofA to mortgage giants Freddie Mac and Fannie Mae.
Citi shares fell 1.5 percent to $47.53 in midday trade.

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