Citigroup To Pay $7B For Risky Mortgages That Led To Financial Crisis

Citigroup has reached a $7 billion settlement with the U.S. government to end a probe into the sale of subprime mortgages that led to the 2008 financial collapse. The agreement includes $4.5 billion in cash to the DOJ and $2.5 billion in consumer relief, via programs to finance affordable housing and homeowner principal reduction by the end of 2018. The settlement is more than twice what analysts had expected, but less than the $12 billion that the government sought. The $4 billion in cash to the feds is the largest payment of its kind.

“The comprehensive settlement announced today with the U.S. Department of Justice, state attorneys general, and the [ Federal Deposit Insurance Corporation] resolves all pending civil investigations related to our legacy RMBS and CDO underwriting, structuring and issuance activities,” Citigroup CEO Michael Corbat said in the statement. “We also have now resolved substantially all of our legacy RMBS and CDO litigation.” Citigroup joins JPMorgan as the only two major banks to settle with federal investigators.