FDIC Announces Settlement With Citi Entities
Settlement of RMBS Claims Totals $208.2 Million
July 14, 2014
Andrew Gray (202) 898-7192
The Federal Deposit Insurance Corporation (FDIC), as receiver for three failed banks, has announced a $208,250,000.00 settlement with Citigroup Global Markets Inc.; Citigroup Financial Products Inc.; CitiMortgage, Inc.; Citigroup Mortgage Loan Trust Inc.; and Citicorp Mortgage Securities, Inc. (Citi Entities) of the receiverships' federal and state securities law claims based on misrepresentations in the offering documents for 24 residential mortgage-backed securities (RMBS) purchased by the failed banks. The settlement funds will be distributed among the receiverships for the failed Citizens National Bank, Strategic Capital Bank, and Colonial Bank.
As receiver for failed financial institutions, the FDIC may sue professionals and entities whose conduct resulted in losses to those institutions in order to maximize recoveries. From May 2012 to September 2012, the FDIC as receiver for the failed banks filed eight lawsuits against the Citi Entities and other defendants for violations of federal and state securities laws in connection with the sale of RMBS. As of January 31, 2014, the FDIC has authorized lawsuits based on the sale of RMBS to a total of eight failed institutions and has filed 19 lawsuits seeking damages for violations of federal and state securities laws.
Citizens National Bank and Strategic Capital Bank were each placed into receivership on May 22, 2009; Colonial Bank was placed into receivership on August 14, 2009.
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's banks and savings associations, 6,730 as of March 31, 2014. It promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.
FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). PR-56-2014