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Wednesday 16 July 2014

Citigroup to pay record fine in $7-billion mortgage settlement

LA Times

Citigroup Inc. will provide $7 billion in cash and consumer relief to settle federal and state investigations into the sale of defective mortgage investments during the subprime housing boom, the Wall Street giant and federal officials said Monday.

California is among several states that will share in the settlement, which includes a record $4 billion in civil fines and $500 million in repayments for public pension fund and other losses, plus $2.5 billion in consumer relief.
Citi will pay California $102.7 million to offset losses in its public pension funds, according to Atty. Gen. Kamala Harris' office. California also is guaranteed at least $90 million in consumer relief, the most of any state.

The agreement follows a series of similar settlements by Wall Street firms that packaged high-risk loans during the housing boom to create bonds they sold to investors around the world. Buyers included public employee retirement funds, which suffered significant losses, as well as smaller financial firms that failed.

JPMorgan Chase & Co.’s $13-billion settlement of mortgage-related claims, announced in November, was the largest of these settlements so far. U.S. Atty. Gen. Eric Holder said more are to come.

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