Breaking News
FONT-SIZE Plus   Neg
Share SHARE

Bloomberg: Citigroup, Bank Of America Likely To Face U.S. Lawsuits

RELATED NEWS
Trade C now with 

Citigroup Inc. (C: Quote) and Bank of America Corp. (BAC: Quote) are likely to face U.S. lawsuits after officials of the Justice Department broke off talks with the banks aimed at settling probes into their sale of mortgage-backed bonds, Bloomberg reported Friday, citing a person familiar with the discussions.

According to the Bloomberg report, Justice Department officials suspended talks with the banks as they were not satisfied with the offers made by the banks. A lawsuit against Citigroup could be filed as early as next week.

The Justice Department has reportedly asked for more than $10 billion from New York-based Citigroup and $17 billion from Bank of America to settle the probes against them, though prosecutors are willing to consider proposals below those amounts. However, Bank of America is said to have offered about $12 billion, while Citigroup has put forward an offer to pay less than $4 billion.

Citigroup is among at least eight banks being investigated by the Justice Department for misleading investors about the quality of bonds backed by mortgages as housing prices plummeted.

Meanwhile, Charlotte, North Carolina-based Bank of America's legal charges have been a huge drag on its earnings, with the bank paying about $60 billion since the financial crisis to settle lawsuits and buy back mortgage securities.

In late March, Bank of America said it agreed to pay about $9.5 billion to settle litigation with Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) related to mortgage-backed securities.

Other banks that have faced scrutiny include Swiss lender Credit Suisse Group AG (CS), Wells Fargo & Co. (WFC), and JPMorgan Chase & Co. (JPM).

JPMorgan said in November 2013 that reached a $13 billion settlement related to the federal government's outstanding civil investigations of the company's residential mortgage-backed securities business. The deal represented the largest settlement the U.S. government has reached with a single company.

In mid-May, the U.S. Justice Department said that Swiss lender Credit Suisse Group AG (CS) pleaded guilty to conspiracy to aid and assist U.S. taxpayers in filing false income tax returns and other documents with the Internal Revenue Service. The company agreed to pay a total of $2.6 billion in penalty.

French lender BNP Paribas SA (BNP.L, BNPQY.PK) has reportedly been urged by federal officials to plead guilty and pay more than $10 billion to settle allegations that the bank violated U.S. economic sanctions that barred doing business with prohibited countries, including Iran. However, the bank has so far resisted.

C closed Friday's trading at $47.59, down $0.68 or 1.41 percent on a volume of 34.84 million shares. BAC closed Friday's trading at $15.44, up $0.02 or 0.13 percent on a volume of 61.59 million shares.

Register
To receive FREE breaking news email alerts for Citigroup Inc. and others in your portfolio

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

Business News

Editors Pick
Dish Network is no longer carrying Fox News in yet another dispute for the television provider. Fox News, which changed the face of cable news with its ardent advocacy of conservative issues, went dark Sunday, replaced on Dish by The Blaze, Glen Beck's new right-leaning channel. Fox Business channel... Swiss drug maker Roche Holding said a late-stage trial of its breast cancer drug Kadcyla did not provide superior results compared with an existing therapy. FCA US, until recently known as Chrysler, said Friday it is recalling 257,000 Dodge Ram pickups. The auto maker says the rear axle pinion nut on certain model year 2005 Dodge Ram 1500 trucks may loosen due to an undersized spline on the pinion gear. If the pinion nut loosens, the rear axle may...
comments powered by Disqus
FREE Newsletters, Analysis & Alerts

 

Stay informed with our FREE daily Newsletters and real-time breaking News Alerts. Sign up to receive the latest information on business news, health, technology, biotech, market analysis, currency trading and more.