California to get $200 million as part of Citigroup’s $7 billion mortgage settlement
California will receive a share of the roughly $7 billion that Citigroup has agreed to pay to settle federal claims regarding the sale of toxic mortgages during the housing boom ahead of the 2008 economic crisis.
Reaching a settlement with the U. S. Department of Justice and five states, including California, the country's third-largest bank said it would pay $4.5 billion in fines and another $2.5 billion in relief funds to consumers.
In wake of the settlement, California Attorney General Kamala D. Harris said in a statement that California would get around $200 million of the total money that Citigroup would pay to settle claims.
The statement added, "Citigroup misled consumers and profited by providing California's pension funds with incomplete information about mortgage investments. This settlement holds Citi accountable and compensates the state's pension funds that protect the retirement savings of hardworking Californians."
The bank's negotiations with the federal authorities picked up the pace on June 9 as the group's leaders struggled to prevent the federal authorities from filing a lawsuit against the bank. Negotiations between the two sides started last fall, after JP Morgan agreed to pay $13 million to settle similar charges.
Citigroup is one of the many banks that were dragged under scanner for selling securities made up of subprime mortgages that were part of the factors that collapsed banks, leading to years of economic stagnation in the United States. Property values that had skyrocketed for the past many years suddenly plummeted, leading to an unprecedented number of foreclosures.
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