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News of the Competition (07/15/2014)
  • WASHINGTON (7/15/14)--After a lengthy and heated negotiation period, Citigroup and the U.S. Justice Department have come to an agreement that will require the big bank to pay $7 billion to resolve accusations that it deceived investors about the quality of mortgage securities it was shopping around in the months leading up to the economic downturn in 2008--misdeeds Citibank has admitted to, according to the Justice Department ( The Wall Street Journal July 14). According to Attorney General Eric Holder, Citibank sold mortgage-backed securities rampant with defective loans, and concealed that information from investors. Before the recession, Citigroup employees knew that the loans they were offering contained "material defects," but sold them anyway, according to The Wall Street Journal . One Citigroup trader wrote an email, circulated internally, that said the bank "should start praying" because they knew the loans were going disintegrate. Of the total $7 billion settlement, $4 billion as a civil penalty will go to the Justice Department, $500 million will go to the Federal Deposit Insurance Corp. and several states, and $2.5 billion will be used for consumer relief ...
  • CHICAGO (7/15/14)-- Illinois Attorney General Lisa Madigan filed lawsuits Monday targeting two companies she believes have been defrauding people with phony student loan consolidation or forgiveness programs ( The Associated Press July 14). The lawsuits allege the two companies have taken part in "deceptive practices," such as charging upfront fees for fake services or charging for services that under state law must be free. One company allegedly asks for an initial payment of $1,200 for phony services, while another has promoted a fictional "Obama forgiveness program" to attract people with student loan debt. Madigan said she will target other companies that employ similar practices aggressively ...


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