Posts Tagged ‘Mortgage Fraud’
The Corporate World - Friday, August 1, 2014 12:38 - 0 Comments
Attorney General Eric Holder announced a settlement last month valued at $7 billion with Citigroup. According to Attorney General Holder, the settlement was “appropriate given the strength of the evidence of the wrongdoing committed by Citi.” He says the civil penalty was a record for this type case. Under the agreement, Citigroup will pay $4.5 billion in cash and an additional $2.5 billion in “consumer relief.” The $2.5 billion is supposed to go to help consumers struggling with mortgages and other problems from the 2007-2009 financial crisis. Attorney General Holder said in a statement:
Despite the fact that Citigroup learned of serious and widespread defects among the increasingly risky loans they were securitizing, the bank and its employees concealed these defects. The bank’s conduct was egregious. And under terms of this settlement, the bank has admitted to its misdeeds in great detail.
The bank has been under investigation by federal authorities for faulty mortgage securities that fueled the housing bubble a decade ago. In a review of every residential mortgage backed security issued or underwritten by Citigroup in 2006 and 2007, it was found “that the misconduct in Citigroup’s deals devastated the nation and the world’s economies, touching everyone,” according to Loretta Lynch, the U.S Attorney in New York’s Eastern District.
The settlement stems from the sale of toxic securities made up of subprime mortgages, which led to both the housing boom and bust that triggered the Great Recession at the end of 2007. Banks, including Citigroup, minimized the risks of subprime mortgages when packaging and selling them to mutual funds, investment trusts and pensions, as well as other banks and investors. The securities contained standard residential mortgages that were publicly promoted as relatively safe investments. Then the housing market collapsed in 2006 and 2007 and, as a result, investors suffered billions of dollars in losses. Those losses triggered a financial crisis that pushed the economy into the worst recession since the 1930s.
Several public advocacy groups have criticized the settlement, calling it a “sweetheart deal,” and they have let it be known they are not satisfied with these settlements. Lisa Gilbert, director of Public Citizen’s Congress Watch division, had this to say about the settlement:
The Department of Justice’s latest settlement with Citigroup over its massive mortgage fraud reemphasizes the backroom nature of these deals. By Attorney General Eric Holder’s own assessment, Citi’s actions were “egregious.” Yet no individuals are being held to account, the bank is not being charged with any criminal activity, the corporation faces no review of its bank charter and business continues in its offices spanning 180 countries. Attorney General Holder says that the settlement doesn’t absolve Citi or Citi officials of possible criminal charges. But the track record of the Department of Justice offers little indication that individuals or the company will be held accountable. We need more transparency on how and why these decisions are made.
Amit Narang, regulatory policy advocate, Public Citizen’s Congress Watch division, also was critical, saying:
As our recent report demonstrates, the Department of Justice has, in the vast majority of cases, shied away from aggressively prosecuting Wall Street banks and opted instead for fines and settlements. As this investigation showed, Citi employees deliberately concealed the risky nature of the loans they were selling. Given how central this deception was to the 2008 financial crisis that devastated our economy, the American public deserves far more than what they’re getting.
Scarlett Naylor, financial policy advocate, Public Citizen’s Congress Watch division, added her comments:
Citi helped fuel the housing bubble that ultimately crashed the American economy, displacing millions of Americans from their homes and jobs. This settlement does little to repair that damage. What should be a painful moment for an institution that trades on trust has become simply a parenthetical in a quarterly press conference about its earnings.
Last year, JPMorgan Chase settled a similar dispute with Justice, paying out $13 billion in a settlement. Of that settlement, $2 billion was a civil penalty. Hopefully, these companies are not getting off too light. I have also wondered why no individuals with the companies have been charged criminally.
Sources: USA Today, WSJ.com and Public Citizen
- TILA Bans Mandatory Arbitration Provisions in Mortgage Loans
- Flagstar to Pay $110 Million to Settle MBIA Mortgage Lawsuit
- A Report On Our Consumer Fraud Section
- The Federal Government Gets Tough On Shady Mortgage Advertisers
- Justice Department Sues Bank Of America For Mortgage Fraud
- U.S. Sues Wells Fargo In Mortgage Fraud Case
- Bank Of America Settles Mortgage Fraud Lawsuit With Bond Insurer Syncora
- $8.5 Billion Mortgage Settlement Sent Back To New York Court
- Mortgage Cases
- Flagstar Mortgage Fraud Lawsuit Settled For $133 Million
- Banks Should Still Have Massive Legal Exposure
- Big Banks Agree To A $25 Billion Foreclosure Settlement
- A Most Significant Ruling In A Fraud Suit Against Countrywide
- Justice Department Unit To Probe Mortgage-Backed Securities
- Merrill Lynch to Pay $315 Million To Settle Mortgage-Loans Lawsuit
- JPMorgan And Bank Of America Sued Over Mortgage Debt Losses
- Regions’ Employee Indicted In Mortgage Fraud
- Intentional Fraud In Mortgage Lending Industry Is Widespread
- Intentional Fraud In Mortgage Lending Industry Is Widespread
- The Role of a Trial Lawyer
- Favorite Bible Verses
- Sandy Hook Families File Wrongful Death Lawsuit
- GM Recalls Vehicles For Headlight Problem
- Daiichi Sankyo Agrees to Pay $39 Million to Settle Whistleblower Lawsuit
- Aging and Dangerous Tires On Our School Buses
- District Court Sanctions Ghostwriting Of Expert Reports
- The Selma March
- Cosco Recalls Convertible Hand Trucks Due To Injury Hazard
- Class Action Sought For Toyota's Electric Power Steering Defect
- Class Action Sought For Toyota’s Electric Power Steering Defect
- The Safety Institute Announces Quarterly Vehicle Safety Watch List
- Automakers Hire Rocket Science Company To Find Cause Of Exploding Air Bags
- Takata Must Preserve Recalled Air Bag Evidence
- President Obama Now Says He Wants To Reverse Citizens United
- Drug Companies Outsourcing Safety Monitoring To Cut Costs
- FTC’s Provigil Pay-For-Delay Suit Passes Actavis Test
- S&P Pays $1.4 Billion In Settlement With DOJ For Inflating Ratings Before 2008 Mortgage Crisis
- High Court Rules That It Is Unfair For Dentists To Limit Teeth-Bleaching Providers
- Governor Robert Bentley Steps Up To The Plate
- BP Claims That Deepwater Claims Administrator Has Conflict
- My sister was a healthy 46 yr. Woman she started having some chest pain and the ...
- I had the driver one replaced 4/29/2013 and now the passenger front went Saturda...
- i received hand cart replacement parts...
- I have a 2004 f150 crew cab front passenger window is up and won't come down so...
- I have a 2004 E350 6.0 diesel that I bought from a company called Sports mobile ...
- my tel # 340-220-3215 I wanted to know if you handled Plavix lawsuits fro...
- my claim # is UJT-10383314601 236605 no claim form attached to the notice i rec...
- We have a 2005 excursion 4x4 6.0 limited. Since buying a couple of years ago wit...