Citigroup, one of America’s largest banks, will have to pay $7 billion to settle a Department of Justice investigation into the bank’s role in the financial crisis, according to a New York Times article published on July 14, 2014.
Citigroup was one of multiple banking operations that sold sub- prime mortgages, often using deceitful and misleading tactics to lure customers. These mortgages were one of the key causes of the financial meltdown that began in 2008 and led to one of the greatest financial crises in decades.
Citigroup’s fine consists of $4 billion in payments to the Department of Justice, $500 million in payments to the FDIC, and $2.5 billion to consumers in the form of relief at different levels and in different forms.
The fine is greater than what Citigroup officials were hoping for, but Citigroup CEO Michael Corbat believes the decision was fair and is prepared to move on.
“We believe that this settlement is in the best interests of our shareholders, and allows us to move forward and to focus on the future, not the past”, said Corbat.
Citigroup is far from being the only banking institution to face stiff fines from its role in the sub- prime mortgage crisis. JP Morgan Chase has paid $13 billion in settlements so far and other banking institutions will also be forced to hand over large sums of cash for their roles in the financial crisis.
Citigroup common shares have been virtually unchanged following the news. The stock is up about 1% in midday trading.