Citigroup Inc. will pay $7 billion — including a record $4 billion civil penalty — to resolve federal and state claims related to the bank’s conduct in the packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities (RMBS) in the lead up to the financial crisis.
As part of the settlement, announced July 14 by the Justice Department, Citigroup acknowledged it made serious misrepresentations about the mortgage loans it securitized in RMBS. The resolution also requires Citigroup to provide relief to underwater homeowners, distressed borrowers and affected communities through a variety of means including financing affordable rental housing developments for low-income families in high-cost areas.
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