DoJ Hints at Further Bank Actions

On the heels of the government's $7 billion settlement with Citigroup over toxic residential mortgage-backed securities (RMBS), leaders at the Department of Justice revealed Monday there may be similar settlements or lawsuits on the way.

In a press conference Monday morning, U.S. Attorney General Eric Holder hailed the Citi settlement—which includes $4.5 billion in penalties—as "a significant step in our ongoing effort to hold accountable those whose actions have threatened the integrity of our financial markets and undermined the stability of our economy."

He also praised the provision of the settlement requiring Citi to provide $2.5 billion in consumer relief, calling it "a must-have element in our agreements with banks that contributed to the mortgage crisis."

Citi stood accused of making misrepresentations to RMBS investors about the quality of mortgage loans packaged in some of the securities the bank sold in the lead-up to last decade's financial crisis.

While Citi and the DoJ were able to come to a resolution, Holder asserted that "it was not at all inevitable" that the case wouldn't go to trial as talks threatened to break down. He also noted that the agreement does not absolve Citi or any of its employees from facing possible criminal charges in the future.

Holder's comments take on deeper meaning in the context of the government's ongoing dealings with Bank of America, which was reportedly close to reaching a settlement on its own MBS case until negotiations stalled. Recent reports indicate Holder has refused to meet with BofA CEO Brian Moynihan as those talks get more heated.

The attorney general hinted at the BofA investigation and other cases in his comments.

"Citi is not the first financial institution to be held accountable by this Justice Department, and it will certainly not be the last," he said. "In the investigations that remain open, we will continue to move forward—guided by the facts and the law—to achieve justice for those affected by the financial crisis."

In his own remarks, Associate Attorney General Tony West hinted that future developments may arrive sooner rather than later.

"[A]s the Attorney General indicated a moment ago, the American people should expect to hear more from the RMBS Working Group in the very near future," he said.