Citigroup to pay $7B in subprime mortgages probe

[Omaha Steve]

Source: AP-EXCITE

By ERIC TUCKER

WASHINGTON (AP) — Citigroup will pay $7 billion to settle an investigation into risky subprime mortgages, the type that helped fuel the financial crisis.

The agreement announced Monday comes weeks after talks between the sides broke down, prompting the government to warn that it would sue the New York investment bank. The bank had offered to pay less than $4 billion, a sum substantially less than what the Justice Department was asking for.

The settlement stems from the sale of securities made up of subprime mortgages, which fueled both the housing boom and bust that triggered the Great Recession at the end of 2007.

Citigroup and other banks downplayed the risks of subprime mortgages when packaging and selling them to mutual funds, investment trusts, pensions, as well as other banks and investors. The securities, which contained so-called residential mortgage-backed securities and collateralized debt obligations, plunged in value when the housing market collapsed in 2006 and 2007. Those losses triggered a financial crisis that pushed the economy into the worst recession since the 1930s.

FULL story at link.



FILE - This Wednesday, Dec. 5, 2012 file photo, shows a Citi Bank sign in Chicago. Citigroup will pay $7 billion to settle an investigation into risky subprime mortgages, the type that helped fuel the financial crisis. The agreement announced Monday, July 14, 2014, comes weeks after talks between the sides broke down, prompting the government to warn that it would sue the New York investment bank. The settlement stems from the sale of securities made up of subprime mortgages, which fueled both the housing boom and bust that triggered the Great Recession at the end of 2007. (AP Photo/Kiichiro Sato, File)



Read more: http://apnews.excite.com/article/20140714/us--citigroup_settlement-928c6d6b00.html

[underpants]

1. Hi, I would like to negotiate an agreement on my getting caught with a joint

CLANK!!! (Cell door shuts)

[Javaman]

2. but will anyone from citibank go to prison?

naaaaaaa.

[heaven05]

5. hell no

they're special.

[Fearless]

3. And that money will be paid out to the victims of their fraud?

Oh wait. My mistake.

[heaven05]

4. is this 'fine'

gonna help me get my house back? Hell no.

[dbackjon]

6. And not a single thief goes to jail.

[Dustlawyer]

7. The fix is in, again! Elizabeth Warren has grilled the heads of the enforcement agencies about

taking them to trial, yet it will never happen. Without reading the full article I bet it says that there is no admission of liability. (They just pay 7 billion out of the goodness of their tiny, frozen hearts!

[riqster]

12. This one at least included an admission of guilt.

Cold comfort, but at least better than usual.

[JDPriestly]

8. And what about the families that were forced into bankruptcy because they still owed

money on their loans after they were foreclosed?

What about the families who had to move in with mom and dad because they lost their homes?

What about all the American who lost their jobs and either haven't been able to find new ones or had to take a drastic pay cut just to keep going?

What about the divorces?

The homelessness?

The children whose grades have worsened because of the upheaval and problems in their homes as their parents fought foreclosure and tried to survive without work?

Those things can never be made right.

The crimes, the fraud, that these bankers and mortgage brokers committed have harmed far more people than some guy selling marijuana or even getting into a bar fight.

Where is justice?

[PSPS]

9. And the "sue and settle" chade goes on, ever since Reagan.

This is just another of a long list of examples of the joke "Sleepy" Holder is. No jail time, no breaking up the firm, nothing more than a measly $7 billion -- just a minor expense item compared to the money Citi made this way.

In China, leaders of firms that do things like this get a bullet in the back of the head. In the US, they just pay off the cops and head to the country club for dinner with their paid-for politician.

[KansDem]

10. That's 5.8% of its net worth

http://www.theirnetworth.com/Businesses/Citigroup/

Cost of doing business...

[woo me with science]

15. The government's cut for protecting them. nt

[4lbs]

11. Citigroup is worth over $700 Billion and is now profitable on over $300 billion of subprime mortgage

http://www.highbeam.com/topics/citigroup-subprime-mortgage-crisis-t10061

Citigroup Inc. is the product of one of the largest mergers of multiple companies, resulting in a global corporation with more than 100 locations in North and Central America, Asia Pacific, Europe, the Middle East and Africa. It was formed when Citicorp merged with Travelers Group in 1998, becoming the largest financial services company in the world with nearly $700 billion in assets.


At one point, Citigroup admitted that it was holding over $300 billion dollars in problem assets, causing its stock price to fall rapidly. These problem assets were predominantly consumer mortgages and mortgage-backed securities.

After receiving the bailout in late 2008, Citigroup has managed to not only pay back those funds, but to also post positive numbers on their annual financial statements for 2010.



So, a $7 billion fine is just 1% of it's net worth, and about 1/4 of the annual profit it makes from mortgages.


It's like punishing a bank robber for stealing a million dollars by saying he needs to pay $10,000 in fines, and not serve any jail time. But hey, he gets to keep the other $990 thousand.

[brett_jv]

13. Bu...bu...but ... this makes no sense ... my right-wing friends all tell me ...

That the entire financial crisis was caused by 'Social Justice' Democrats passing laws that forced the poor banks to loan to people who couldn't pay it back.

Hardly seems fair to make this wholly honest and innocent Bank pay a fine for what a bunch of DemocRAT politicians insisted they do!

[kokobell616]

14. The Good Book

Maybe it was right all along. An eye for an eye.