Citigroup to pay $7 billion in subprime-lending probe

Associated Press

WASHINGTON

Citigroup has agreed to pay $7 billion to settle a federal investigation into its handling of risky subprime mortgages, admitting a pattern of deception that Attorney General Eric Holder said “shattered lives” and contributed to the worst financial crisis in decades, the Justice Department said Monday.

The settlement represents a moment of reckoning for one of the country’s biggest and most-significant banks, which is now accountable for providing some financial support to Americans whose lives were dismantled by the largest economic meltdown since the Great Depression.

In addition to a $4 billion civil penalty being paid to the federal government, the bank also will pay $2.5 billion in consumer relief in part to help borrowers who lost their homes to foreclosure and about $500 million to settle claims from state attorneys general and the Federal Deposit Insurance Corp.

The agreement does not preclude the possibility of criminal prosecutions for the bank or individual employees in the future, Holder said.