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
BlackRock Inc., the world's largest asset manager, said it plans to speak with gun makers and distributors following public outcry after the Florida high school shooting that killed 17 people. BlackRock, which had $6.3 trillion in assets under management as of December 31, 2017, holds shares in gun makers Sturm Ruger & Co. Inc. as well as American Outdoor Brands Corp. An upgraded boarding in Southwest Airline will cost you more. The airline usually not assign seats to passengers, but one can choose from an open seat. The Upgraded Boarding will allow passengers to choose from A1 - A15 boarding positions. The cost for these positions would be $30, $40 and $50, depending on flight and route. This option can be availed from the ticket counter or gate. Citigroup Inc.'s co-head of mergers and acquisitions, Peter Tague, is leaving the company, according to media reports, citing people familiar with the matter. Tague has been co-head of Global M&A business at Citigroup since March 2012, alongside Cary Kochman and Mark Shafir. It was not immediately clear what Tague intends to do after he leaves Citigroup.
comments powered by Disqus
Follow RTT