The U.S. Justice Department has asked Citigroup for more than $10bn to settle a probe into the lender’s sale of mortgage-backed bonds before the 2008 financial crisis, a person familiar with the negotiations said.
Bloomberg News reports that prosecutors broke off talks with Citigroup on June 9 and are preparing to sue the bank after it offered less than $4bn to resolve the matter, said the person, who asked not to be named because the discussions are confidential. The Justice Department could file a lawsuit as early as next week, according to the person, who also said the bank’s offer included about $1bn in cash and the rest in consumer relief.
The stance against Citigroup reflects a tougher approach by the Justice Department following criticism that it hadn’t done enough to punish large financial institutions for their role in the collapse of home prices and ensuing financial market turmoil. Prosecutors are demanding multibillion-dollar penalties from banks for wrongdoing including tax evasion and sanctions violations and have used the threat of lawsuits to reach settlements.
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