Tomahawk, WI 07/15/2014 (Basicsmedia) – Investors Relieved
Citigroup, Inc. (NYSE:C) accused for misguiding their investors for poor quality mortgaged securities as a back up to deal with the financial crisis, is now ready to pay a handsome $7 billion price to come to a settlement. The U.S. Justice Department penalized the group for the largest civil fraud ever. It took around six years after the U.S Justice Department and the group to come to an agreement. Survey by one of the U.S. Justice Department into group’s packaging and sale of home loan activities pointed to their instability.
Reasons Behind The Agreement
The possible reasons could be,
They marked the securities safe even knowing the fact that they would collapse, which eventually led them to 2007-2009 financial crisis.
Somewhere Citigroup knew that they were not complying with the guidelines they were aware of and still pooled sample loans and securities together.
An email from trader to Citigroup colleagues contained a report on their poor quality of loans.
The bank showed higher values either of incomes of borrowers or/and their home values than their original in many loans. Still the bank securitized the loan according to the department’s reports. The department even threatened the bank to sue them for months of negotiations over a deal which was signed in over a weekend.
U.S. Attorney General Eric Holder in a statement exposed to the media that the penalty finalized for the bank was very appropriate knowing the number of frauds the bank has done. He added that despite of the groups being aware of the fact that they were securitizing some very risky loans with some serious defects in Citigroup, Inc. (NYSE:C), still continued on their path of hiding it.
In the agreement signed between the U.S. Justice Department and the group, the business will pay $4.5 billion in cash and the other $2.5 billion will be used as an aid for tenants and suffering homeowners.