(AP) -- Citigroup has
agreed to pay $7 billion to settle a federal investigation into its
handling of risky subprime mortgages, admitting to 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 will also 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 Corporation.
The
agreement does not preclude the possibility of criminal prosecutions for
the bank or individual employees in the future, Holder said.
The
$7 billion settlement, which represents about half of Citigroup's $13.7
billion profit last year, is the latest substantial penalty sought for a
bank or mortgage company at the epicenter of the housing crisis.
