Citigroup Reaches A Settlement With The Government

Citigroup Reaches A Settlement With The Government

Citigroup Inc. will pay $84 million to Illinois as part of a $7 billion settlement for alleged sales of risky mortgage-backed securities affecting investors. Around $33.04 million will be paid to the Illinois Teachers’ Retirement System and $7.83 million will be paid to the Illinois State Board of Investment. The State Universities Retirement System will receive $3.12 million while $40 million will be set aside for consumer relief. It will also be used for an independent monitor that will facilitate the distribution of the money

Lisa Madigan, Attorney General of Illinois, said the settlement will restore the losses incurred by the pension systems of Illinois due to sales of mortgage-backed securities by Citigroup Inc. It will also help homeowners in Illinois who are still paying for the careless actions on Wall Street.

The settlement will include a $4 billion payment to the Department of Justice, $2.5 billion for consumer assistance and $500 million to the Federal Deposit Insurance Corp and state attorney generals.

The bank is the second major financial institution to agree to a settlement after a task force was created by President Barack Obama to check on the sale of risky home loans during the financial crisis in 2008.

A settlement was also made by the bank with the Federal Housing Finance Agency for $250 million. The bank was sued by the finance agency over tainted mortgage securities that were sold to Freddie Mac and Fannie Mae.

The bank will provide assistance in 2018. The settlement followed several months of negotiations, which included the possibility that the bank would be sued by the government. A pretax charge amounting to around $3.8 billion was also taken by the bank. This resulted to a reduction in the earnings of the bank by 96 percent.

Shares of Citigroup Inc closed higher at $48.42 or by three percent.

Posted by James Fried on Wednesday July 16 2014, 4:42 AM EST. Ref: Chicago Tribune. Link. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0