logo
Share SHARE
FONT-SIZE Plus   Neg

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

Citigroup Inc. (C) and Bank of America Corp. (BAC) 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.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

Business News

Editors Pick
The Justice Department has initiated a probe to find out if airlines are colluding to limit seating capacity in order to benefit from higher airfares. Saudi Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud has pledged to give away his entire wealth amounting to $32 billion for charity. He said the fund will be utilized for cultural understanding, develop communities, empower women, enable youth, provide vital disaster relief and create a more tolerant and accepting world. Toyota accepted the resignation of its Chief Communications Officer Julie Hamp, following her arrest in Japan for allegedly mailing banned painkillers to her address in Japan from U.S.
comments powered by Disqus
Follow RTT