Government won’t prosecute big bank execs in mortgage-bond fraud – report

by Ryan Smith04 Mar 2016
No Citigroup executives or employees will face criminal charges over the packaging and selling of faulty mortgage bonds during the run-up to the financial meltdown, according to a Reuters report.

The decision not to pursue criminal charges was made in the wake of Citigroup’s $7 billion settlement resolving state and federal claims related to faulty mortgage-backed securities. Reuters uncovered the decision in a November report obtained by the news agency through the Freedom of Information Act.

The report’s release marks the first public acknowledgement by authorities that big bank executives would not face criminal prosecution for their role in the financial crisis, according to Reuters.

According to the report, authored by the Federal Housing Finance Agency’s Office of the Inspector General, prosecutors investigated whether any individual Citibank executives should be charged, but determined that “there was not enough compelling evidence” – even though the report also stated that “the totality of the evidence and testimony obtained showed that Citigroup knowingly and purposefully purchased and securitized loans that did not meet representation and warranties or in many cases were outright fraudulent loans.”

The government has weathered years of intense criticism over its failure to criminally prosecute big bank executives who played a role in the 2008 mortgage meltdown.