Citigroup Settles Mortgage Fraud Charges For $158 Million, Admits Fault

The U.S. Department of Justice nailed Citigroup on mortgage fraud charges, getting the bank to agree to pay out a $158 million settlement while admitting it tricked a federal insurance program into backing bad loans. When borrowers defaulted, taxpayers ended up footing the bill.

The L.A. Times reports the DOJ’s complaint accused Citigroup of violating a Federal Housing Administration insurance program’s rules for six years. The bank allegedly failed to pre-screen mortgages and report signs that the loans were in trouble.

Because it was able to get government insurance for its ill-advised loans, the bank could turn around and sell them to investors and reap larger profits. Citigroup says it’s happy to have the case behind it and still plans on having its loans insured by the FHA.

The settlement most likely won’t damage the bank’s ability to do business as it pleases, but hopefully for the sake of taxpayers it does a better job of screening its loans so the government doesn’t get stuck with its poor bets.

Citigroup admits mortgage fraud in $158-million settlement [L.A. Times]

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  1. Cat says:

    So, who’s going to jail?
    Oh, I see. Business as usual.

    Carry on, Citibank

    • rdm says:

      Wait! “…but hopefully for the sake of taxpayers it does a better job of screening its loans so the government doesn’t get stuck with its poor bets.” So, it’s all going to be fixed now.

  2. Fubish says: I don't know anything about it, but it seems to me... says:

    1. How much did the government (you and me) lose on these transactions?
    2. What miniscule percentage of that sum is $158 million dollars?
    3. Why is Kamala Harris calling it a “tremendous victory?”

  3. mauispiderweb says:

    Coming up next … BOA demands first born from each customer, admits fault, pays fine, keeps children to train as future tellers.

  4. deathbecomesme says:

    So a slap on the wrist again for breaking the law

    • Maltboy wanders aimlessly through the Uncanny Valley says:

      The government wants this to go away without shedding too much light because they are as much to blame as anybody.

  5. deathbecomesme says:

    We need to penalize these criminals the full amount they profited + penalty fees. That is the only way to deter them.

    • Loias supports harsher punishments against corporations says:

      Agreed. Punishment against private citizens rarely, if ever, less than the severity of the crime itself.

      Let’s put it this way: If a child steal 10 lunches from other kids and school, and his punishment is to give back 6 of those lunches, does this actual deter the child from committing the same crime?

      • DariusC says:

        It’s almost as if we are subsidizing their criminal activities by bailing out their bad loans… Isn’t it illegal to fund a criminal orgnization? Who holds the government accountable? Doesn’t seem like the people… so… the UN?

    • Mr. Bill says:

      30 years for the C.E.O. would do better.

  6. xanxer says:

    I thought corporations were people with rights. Why isn’t the corporation “in jail”?
    $158 Million is a joke!

  7. Maltboy wanders aimlessly through the Uncanny Valley says:

    Hey Citigroup, you stole $1000! Now you must pay this $2 fine! That’ll teach you!

  8. HalOfBorg says:

    So, let me see if I have it.

    1) Force lenders to loan to people who have little chance of paying back (and other bad loan ideas).

    2) When companies do what they can to NOT let their slit throats bleed them to death, prosecute them.

    3) Fine them a small percentage of what the whole disaster costed, knowing full well that their CUSTOMERS will end up paying the fine.

    Got it.

    • HalOfBorg says:

      Need a damn edit button. ‘Costed’ – WTF, I’m even awake.

    • Loias supports harsher punishments against corporations says:

      “The bank allegedly failed to pre-screen mortgages and report signs that the loans were in trouble.”

      Sorry to destroy your fantasy world. You can still come over to mine and play with my unicorns.

    • coffee100 says:

      4) Fail to enforce any law when the financial institution processes a loan where the income section is blank. Further, fail to enforce any law when the financial institution submits forged documents before a court of law.

      If you’re looking for the particulars, it’s 18 U.S.C. section 1344 and (in California) C.P.C. Section 470. Bank Fraud is a felony. Forgery on this scale is probably a felony also. Then there’s the conspiracy cases.

      But hey, get those foreclosures filed and get those families out in the street. They couldn’t pay their $5700 a month mortgage on a two-bedroom clapboard shitbooth.

    • Fubish says: I don't know anything about it, but it seems to me... says:

      How’s things on Pluto?

    • RvLeshrac says:

      1) Complete bullshit. What fantasy world do you people live in where this is even remotely true? They were told to stop discriminating against lower-income borrowers by pricing them out of loans, they weren’t told to give them shit loans with ridiculous terms, then falsify documents.

      2) You’re arguing that the rapist shouldn’t be held responsible for killing his victim because the penalty for rape was going to be greater than the penalty for the second-degree murder charge.

      3) You’re right on this count, at least. The fine should be a minimum of twice the real-cost of the crime.

  9. conquestofbread says:

    You know, shit like this confirms my belief that the best way to deal with this is to let loose a mob outside of the homes of a few Citigroup execs responsible for this.

    And maybe the police will conveniently take their time getting there to help.

    These big bank executives know that they’re above the law, and maybe a few thousand angry proles can strike sufficient terror into the hearts of their peers, and they will think twice about their business practices.

    Just a fantasy…

  10. dush says:

    Big problem here is the govt insurance.
    Why are the taxpayers forced to foot this bill in the first place? If that wasn’t there the banks wouldn’t have incentive to make unsound market decisions.

  11. Shorebreak says:

    “…admitting it tricked a federal insurance program into backing bad loans.”

    Now that sounds like someone should be indicted and doing the perp walk to the hoosegow. But as usual, no one from the TBTF (Too Big To Fail) banks are being prosecuted for their crimes . Oh that’s right, corporations now have constitutional rights just like people but they can’t go to jail. A mere small fine and a slap on the wrist will do. The problem that Bernie Madoff made is that his fraud wasn’t big enough.

    • razremytuxbuddy says:

      “…admitting it tricked a federal insurance program into backing bad loans.”

      Now that sounds like someone should be indicted and doing the perp walk to the hoosegow. …”

      Agree 100%.

  12. Wench86 says:

    Citibank learned everything they know from BOA