US preparing to file lawsuit seeking more than US$10B from Citigroup to settle a probe into lender's sale of mortgage-backed bonds before 2008 financial crisis, says person familiar with matter; talks ended after lender offered to pay less than US$4B

Allison Oesterle

NEW YORK , June 13, 2014 (Bloomberg LP) – The U.S. Justice Department has asked Citigroup Inc. for more than $10 billion to settle a probe into the lender’s sale of mortgage-backed bonds in the run up to the 2008 financial crisis, according to a person familiar with the negotiations.

Prosecutors broke off talks with Citigroup on June 9 and are preparing to sue the bank after the lender offered less than $4 billion to resolve the matter, said the person who asked not to be named because the negotiations are private. The Justice Department could file a lawsuit as early as this week, the person said.

Citigroup is among at least eight banks under investigation by the Justice Department for misleading investors about the quality of bonds backed by mortgages as housing prices plummeted. JPMorgan Chase & Co. paid $13 billion in November to resolve federal and state investigations of similar conduct.

Citigroup and the department have been negotiating a resolution since April, the person said.

Mark Costiglio, a bank spokesman, didn’t immediately respond to phone and e-mail requests for comment.

--With assistance from Dakin Campbell in New York.

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net To contact the editors responsible for this story: Sara Forden at sforden@bloomberg.net Joshua Gallu

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