Citigroup, Deutsche Bank Pay $165 Million To Settle Claims They Misled Credit Unions

WASHINGTON — Citigroup Inc. and Deutsche Bank are agreeing to pay a total of $165.5 million to settle federal regulators' claims that they misled five failed credit unions about the risk of securities tied to mortgages.

The National Credit Union Administration announced the settlements Monday over securities that the big Wall Street banks sold the five wholesale credit unions.

After the five credit unions failed in 2009 and 2010, the federal agency seized them and liquidated them. It imposed charges totaling $3.3 billion on the 7,000 or so credit unions nationwide to cover the losses from those failures.

Citigroup will pay $20.5 million, and Deutsche Bank will pay $145 million. Neither admit or deny wrongdoing.

The NCUA has made similar allegations against JPMorgan Chase & Co., Goldman Sachs & Co. and Royal Bank of Scotland.

The settlements are the latest of many involving the role of big Wall Street banks before the financial crisis erupted in late 2008.

Last month, Citigroup agreed to pay $285 million to settle civil fraud charges by the Securities and Exchange Commission that it misled buyers of a complex mortgage investment just as the housing market was starting to collapse in 2007.

Goldman Sachs paid a record $550 million to settle similar SEC charges last year, and JPMorgan resolved similar charges in June and paid $153.6 million.

The federal agency that oversees government-controlled Fannie Mae and Freddie Mac has filed civil lawsuits against several banks in connection with the two mortgage giants' losses from securities tied to risky mortgages.

Buyers of the mortgage securities made money from the investments if the underlying debt was paid off. But as U.S. homeowners started falling behind on their mortgages and defaulted in large numbers in 2007, the securities failed and their buyers lost billions.

Wholesale credit unions, known as corporate credit unions, provide financing and investment services to the much larger population of retail credit unions. There are about 30 in the U.S. The five that failed were U.S. Central, Western Corporate, Southwest Corporate, Members United Corporate and Constitution Corporate.

Comments

[blood1]

12:34 PM on 11/15/2011

Read the FCIC: Financial Crisis Inquiry Commission said that the cause of the 08 Collapse was due to TBTF banks, not Freddie and Fanny.

http://fcic-static.law.stanford.edu/cdn_media/fcic-reports/fcic_final_report_chapter11.pdf

[blood1]

12:31 PM on 11/15/2011

And yet today, my congresscritter is still trying to blame Fannie and Freddie for the Wall Street Collapse.

Take action: sign up on their FB page and tell them that the average voter is not ignorant and that their action against Fannie and Freddie is a bait and switch game to somehow make us believe that the TBTF Banks were innocent: DON"T let them get away with this LIE!

[DazedandConfused]

11:38 AM on 11/15/2011

I would be interested in knowing whether banks could be indicted under RICO (Racketeer, Influence, & Corruption Act). Maybe a stretch. But I think it's safe to say that someone could argue that the banks are "a criminal enterprise." And the statute does include "gambling" and securities fraud.

[hearken]

10:27 AM on 11/15/2011

Every time a bill is written in The House they make sure there are enough loopholes to save their own ASSets. The word loopholes is a synonym for deception.

[hearken]

10:24 AM on 11/15/2011

If they weren't guilty they wouldn't pay a dime.

[RecreationalPilot]

07:59 AM on 11/15/2011

Companies are People

What would happen if a real person sold fraudulent goods?

[Lise Williams]

12:37 PM on 11/15/2011

JAIL! That's what would happen!

[big tom]

07:22 AM on 11/15/2011

same story every week. same players .same charges..fraud. when do the cuffs and orange suits become popular... this will continue til serious jail time is customary for these crooks.

[Opinionated Lady]

07:13 AM on 11/15/2011

Hmm...what's the difference between "misled" and "defrauded"? Oh, a fine instead of jail...

[RecreationalPilot]

08:00 AM on 11/15/2011

It's so obvious it isn't misled... must be some legalese why it was written that way.

[Dennis Higgins]

05:09 AM on 11/15/2011

How come they only pay millions when billions were stolen??? NO criminal charges either??? OWS is 100% right and some of these folks need serious jail time. Shame on the Justice Dept. for agreeing to this "Settlement."

[RecreationalPilot]

08:01 AM on 11/15/2011

Yes. They should refund all of it, plus penalties and interest.

What happens when you own a Federal Income Tax balance, they hit you with penalties and interest.

[Grimway]

02:04 AM on 11/15/2011

Who in the JUSTICE system decide that PAY and we will ignore the crime was JUSTICE?? the Justice Branch is broken like ALL the other branches of government. OWS is pissed about exactly this crap!

[novelist2000]

12:21 AM on 11/15/2011

And here we have her again, Deutsche Bank. CEO Ackermann just resigned after police searched DB offices and at least one private abode. The claim here is false testimony in the Leo Kirch affair. Now Kirch certainly deserved DB and somehow I can't help grinning because the ingrained shonkiness that I experienced in that country was one of the reasons to leave.

[nopilikia]

11:40 PM on 11/14/2011

Congress you gave the Wall Street banksters a "Get Out Of Jail Free" card in 1999.......time to take it back. Subject the Wall Street banks to State's Bucket Shop Laws of 1909 (Unregulated gambling) once again. Should have been at the top of your list when doing your so called "financial reform" of Wall Street.

[CaitlinO]

10:11 PM on 11/14/2011

I just did the math. For every dollar they stole from the Credit Unions, they paid 5 cents. What a travesty!

[nopilikia]

11:42 PM on 11/14/2011

Travesty indeed.........steal billions.....pay back millions, and no jail time.

[CaitlinO]

10:00 PM on 11/14/2011

When are we going to finally say ENOUGH!! ENOUGH of criminal fraudulent banks paying pennies on the dollar to their victims! ENOUGH of no admissions of guilt for clearly criminal behavior! ENOUGH of courts who accept this nonsense as "justice!"

There can be justice through the courts or the rough justice of the mob. But there WiLL be justice eventually!

[glpur1]

11:58 PM on 11/14/2011

We've seen this senario play out time and time again. They stole billions pay back a few million and spend not a single day in prison! Hell they even get millions in bonues for their criminal behavior! This president (along with his incompetent and/or corrupt Attorney General) and this congress must be voted out of office! If the American people don't throw the bums out after all this every elected official will conclude that they can do whatever the hell they want to do...and they'll be right!

[RecreationalPilot]

08:03 AM on 11/15/2011

If it were a person, they'd probably be in jail.

[bjp4321]

08:58 PM on 11/14/2011

"Citigroup will pay $20.5 million, and Deutsche Bank will pay $145 million. NEITHER ADMIT or DENY WRONGDOING."

I am very tired of the big banksters getting caught with their hands in the cooking jar and then just being slapped on the wrist. The law should be changed that in order to have a settlement the corporate officers and board of directors should have to admit to what they did wrong or deny wrong doing under oath. If wrong doing can be proved then they have purjured themselves and they should be put in jail.