Bank of America and Citigroup likely will face lawsuits after Department of Justice officials ended talks with the two banks that were aimed at settling their probes into the sale of bonds that were mortgaged backed.
According to reports, officials from the Justice Department suspended the talks with the two banks due to not being satisfied with offers made by the financial institutions.
On source said, it could be as soon as next week that a lawsuit is filed against Citigroup.
The DOJ has asked for over $10 billion from Citigroup and $17 million from the Bank of America in order to settle probes against the two, though DOJ prosecutors will consider proposals that are less than those two amounts.
It is thought that Bank of America officials offered $12 billion, while those from Citigroup offered under $4 billion.
Citigroup is amongst eight banks that are being investigated by the DOJ for misleading their investors about the bonds’ quality that were backed by mortgages as the prices of housing plummeted.
At the same time, Bank of America, based in North Carolina has had legal charges that have dragged on its earnings, with the financial institute paying nearly $60 billion since the financial crisis started to settle various lawsuits and to buy back securities that were mortgage backed.
BOA in March said it had agreed to pay $9.5 billion to settle its litigation with Freddie Mac and Fannie Mae over securities that had been mortgage backed.
Other banks have faced tough scrutiny including Credit Suisse Group AG a Swiss lender, JPMorgan Chase and Wells Fargo.
In November of last year, JPMorgan reached a settlement of $13 billion that was related to the civil investigations of the financial institute’s residential mortgage-backed business.
That deal was the largest settlement that the government in the U.S. has made with one company.
This past May, the DOJ said that Credit Suisse Group had pleaded guilty to a charge of conspiracy to assist and aid taxpayers from the U.S. in filing income tax returns that were fraudulent and the IRS documents.
The company paid a penalty of $2.6 billion.