Just as the federal government reached an agreement on Tuesday with SunTrust Banks over questionable mortgage practices, the government’s talks to resolve Citigroup’s mortgage issues grew increasingly tense and veered toward a lawsuit, the New York Times DealBook blog reported yesterday. The size of the $968 million settlement with SunTrust pales next to the multibillion-dollar pacts that the government has signed — or is seeking to sign — with the nation’s largest banks. The Justice Department is seeking a $10 billion penalty from Citigroup over its sale of defective mortgage investments, but Citi contends that the amount far exceeds the losses suffered by investors.
