NEW YORK: The Justice Department has asked Citigroup for more than $10bn to settle claims the bank misled investors on mortgage-backed bonds sold before the 2008 financial crisis, a report said.
US prosecutors broke off talks with Citi and are preparing a lawsuit against the bank after the financial giant offered less than $4bn to settle the case, Bloomberg News reported.
News of the Citi case follows other multi-billion dollar government settlements with major banks over their sale of mortgage-backed securities before the housing bust. The government has charged that the banks falsely claimed the investment vehicles were low-risk when many were linked to risky mortgages that ended up defaulting.
JPMorgan Chase in November agreed to pay $13bn to settle several mortgages suits with the Justice Department.
Bank of America is reportedly in talks with the Justice Department on a similar deal for $12bn or more. That would follow a $9.5bn settlement with the Federal Housing Finance Agency over mortgage-backed securities sold by BofA to mortgage giants Freddie Mac and Fannie Mae.
AFP
