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
British lender Lloyds Banking Group Plc. Friday reported higher profit in its first half, benefited by increased net interest income and margin as well as lower impairment. Looking ahead, the company lifted its net interest margin forecast. Amgen reported an increase in second-quarter profit, driven by sales of arthritis drug Enbrel and osteoporosis treatments Xgeva and Prolia, and improved margins. Both earnings and sales topped Wall Street estimates. Electronic Arts Inc. (EA) on Thursday reported an increase in profit for the first quarter, reflecting continued strong digital revenues, with both earnings and revenues topping Wall Street estimates. However, shares of the company fell over 4 percent, after having detailed a weak outlook. Redwood...
comments powered by Disqus
Follow RTT