Citigroup (C) and the U.S. Justice Department reportedly plan to meet next month to begin multibillion-dollar settlement talks aimed at ending investigations into how the megabank handled second-rate mortgage-backed securities [MBS] created during the housing bubble.
Citing people familiar with the matter, The Wall Street Journal stated that the scheduled meeting will be the first opportunity for both sides to put a number on a possible deal.
The Justice Department has not yet floated a number with the bank, the report notes, but an agreement could cost the New York-based firm billions of dollars.
The discussions, which revolve around the bank’s sale of residential MBS – a financial instrument that helped sustain an overpriced and artificial mortgage market, are part of a continuing push by the DOJ to hold the big banks accountable that regulators and law enforcement believe contributed in part to the 2007-2009 financial crisis.
Bloomberg reported over the weekend that the DOJ is also asking Bank of America (BAC) to pay more than $13 billion to settle federal and state probes related to the lender’s improper mortgage-bond underwriting practices that took place during the financial crisis. If paid, it would bring the total penalties that the Charlotte, NC-based bank has paid in connection with faulty mortgages to more than $22 billion.
Shares of Citigroup closed at $45.75 on Friday.