American banking giant Citigroup has reportedly agreed to pay nearly US$7 billion to settle allegations it sold shoddy mortgages in the run-up to the 2008 financial crisis.
The deal, signed over the weekend, concludes months of negotiations during which the government demanded US$12 billion and threatened to sue Citigroup.
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Under the agreement, Citigroup is required to US$4 billion in cash to the Justice Department, US$2.5 billion in consumer relief, more than US$200 million to the Federal Deposit Insurance and US$300 million to settle investigations by five states.
The settlement also covers Citigroup’s potential exposure for tens of billions of dollars’ worth of collateralized debt obligations.
According to a Wall Street Journal report, the settlement is far higher than the US$3 billion Citigroup had offered to settle, but less than the US$10 billion the government was seeking.
Bank of America also has been negotiating with the Justice Department over similar claims.
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By GlobalDataLast year, JPMorgan Chase too agreed to pay US$13 billion to settle government probes over the sale of toxic mortgages.
