logo
Plus   Neg
Share
Email
Comment

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
Angry protesters are planning more than 50 demonstrations on Friday at several Tim Hortons locations across Canada after some franchise owners in Ontario slashed workers' benefits as well as paid breaks in response to the Ontario government's minimum wage hike. The protests are being organized by advocacy group Leadnow and the Fight for $15 & Fairness Campaign. Athletic footwear giant Nike, Inc. on Thursday announced a new marketing head, in its efforts to boost market share. The company promoted Dirk-Jan "DJ" van Hameren as its VP, Chief Marketing Officer, effective immediately. Van Hameren will succeed Greg Hoffman, who has been appointed VP, Global Brand Creative & Marketing Innovation Amazon.com Inc. (AMZN) said Thursday that it has chosen the 20 metropolitan areas to move to the next phase of the selection process for the company's second headquarters. The company plans to invest over $5 billion and grow the second headquarters to accommodate as many as 50,000 high-paying jobs.
comments powered by Disqus
Follow RTT