Squashed

A blog of politics, law, religion, and the tricky spots where they collide.

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There was no testimony and no trial. Citigroup admitted wrongdoing on Feb. 15 and paid the $158.3 million to settle.

Bloomberg: Woman Who Couldn’t Be Intimidated By Citigroup Wins $31 Million

Citigroup admitted approving loans for government insurance that didn’t qualify under Federal Housing Administration rules. Prosecutors kept open the possibility of bringing criminal charges, without specifying targets.

The article recounts massive complicity in fraud perpetrated by CitiMortgage. Essentially, Citi packaged a bunch of mortgages for government insurance, ignored a bunch of defects, and left taxpayers on the hook for its mess. These defective mortgages are one of the primary causes of the collapse.

A few takeaways:

  1. Mortgage fraud was committed by both the little players (who you expect to commit the occasional fraud) and the huge players, who should be able to control for that sort of thing.
  2. The Department of Justice is prosecuting the guys who caused the financial crisis. $158.3 million is a bee sting for Citi. But this is just one of many suits for similar stuff. When you combine that with the $25 billion settlement and a heap of other outstanding liability, it gets very significant.
  3. Check it out. The Dodd-Frank Act did something.
  4. Not every Department of Justice would aggressively prosecute this sort of thing. The DoJ’s willingness to go over corporate wrongdoing depends a lot on who is President and who that President appoints as Attorney General.
  5. Could we get a showing of hands from everybody who believes that the Republican’s obsessive desire to bring down Attorney General Holder is completely disconnected with Holder’s willingness to bring suits against the financial industry?

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