California to receive portion of national settlement with Citigroup

Posted by BoNhia Lee on July 14, 2014 

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California will get a nearly $200 million bite out of a $7 billion national settlement with Citigroup over mortgage-backed securities the bank sold before the financial crisis.

Part of the settlement includes $102,700,000 in damages that will reimburse the state pension funds, CalPERS and CalSTRS, Attorney General Kamala D. Harris announced on Monday.

California is also guaranteed at least $90 million in consumer relief.

“Citigroup misled consumers and profited by providing California’s pension funds with incomplete information about mortgage investments,” Harris said in a news release. “This settlement holds Citi accountable and compensates the state’s pension funds that protect the retirement savings of hard working Californians.”

As part of the settlement, Citigroup acknowledged that it misled the public and investors about its mortgage-backed securities.

The global bank was assessed a $4 billion penalty, the largest to date. It is also required to provide $2.5 billion of relief nationwide to consumers in the form of principal forgiveness, loan modifications, donations to housing and legal assistance nonprofits and efforts to reduce blight.

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