Illinois gets $84 million from Citigroup $7 billion settlement

[lunasun]

http://politics.suntimes.com/article/chicago/illinois-gets-84-million-citigroup-7-billion-settlement/mon-07142014-457pm

Chicago taxpayers, pension systems and neighborhoods where large numbers of renters and homeowners still struggle with subprime and other risky mortgages will share in Illinois’ $84 million portion of a national $7 billion settlement with Citigroup.The settlement, announced Monday, will be paid by Citigroup to the U.S. government for selling securities that led to the housing bust and the Great Recession.

Illinois Attorney General Lisa Madigan announced the state’s take of the settlement at a news conference at the State of Illinois Building on the same day that Citigroup revealed the deal during its quarterly earnings announcement.
The national settlement stems from the bank’s marketing and sale of securities made up of subprime mortgages, which fueled the boom and bust that triggered the Great Recession in 2007.In Illinois, the settlement includes $40 million in as-yet-unspecified consumer relief as well as money for blight reduction. An independent monitor will be appointed to oversee the relief distribution.

Citigroup also will pay $44 million to the Illinois Teachers Retirement System, the State Universities Retirement System, and the Illinois State Board of Investment, which oversees the State Employees’ Retirement System, General Assembly Retirement System and Judges’ Retirement System. Madigan said the $44 million would be “a help,” but that it wouldn’t fully address the state’s unfunded pension liabilities.

Madigan said that a bigger issue remains unsettled: Her legal action against Standard & Poor’s, a national credit rating agency. She claims the company compromised its independence by giving high ratings to risky investments in order to increase its revenue and market share.Citigroup, among other banks, downplayed the risks of subprime mortgages when packaging them selling them to mutual funds, investment trusts, pensions, as well as other banks and investors.

J.P. Morgan is the only other major U.S. bank to settle so far, though Bank of America is reportedly in talks to do so.

[freshwest]

1. Thanks, lunasun, this is good!