Citigroup Inc. may reach an agreement with federal prosecutors as early as next week to resolve a probe into sales of mortgage-backed bonds before the 2008 financial crisis, a person familiar with the negotiations said.
The bank would pay at least $4 billion under an agreement with the Justice Department, according to the person, who asked not to be named because the talks are private. The deal would be $7 billion including borrower relief such as mortgage modifications, the New York Times reported. Mark Costiglio, a spokesman for New York-based Citigroup, declined to comment on the talks.
The lender had offered less than $4 billion while federal prosecutors had sought more than $10 billion, a person familiar with the matter said last month.
Citigroup is among banks facing investigations into whether they misled investors about the quality of bonds backed by mortgages as housing prices plummeted. Prosecutors have sought multibillion-dollar penalties from banks this year for wrongdoing that included violations of U.S. sanctions and helping clients avoid taxes.
Prosecutors broke off talks with Citigroup on June 9 and were preparing to sue the bank after it offered less than $4 billion to resolve the matter, said the person who spoke last month. The Justice Department could still file a lawsuit, according to the person, who also said the bank's offer included about $1 billion in cash and the rest in consumer relief.Copyright © 2014, Los Angeles Times