The Justice Department and Citigroup Inc. are close to a deal for the bank to pay about $7 billion to settle allegations it sold shoddy mortgages in the run-up to the financial crisis, the Wall Street Journal reported today. The two sides, which had been far apart just weeks ago, are ironing out details of an agreement that could be announced as early as next week that would avert a federal lawsuit over the mortgages. The potential settlement marks a reversal from mid-June, when the Justice Department had warned that it planned to file a lawsuit unless Citigroup significantly raised its settlement offer. Citigroup had been offering about $4 billion, while the government was seeking close to $10 billion, a figure the bank found objectionable. The bank had argued that its pre-crisis conduct shouldn't warrant such a large penalty and that it should pay far less than the $13 billion paid in November by JPMorgan Chase & Co., which packaged and sold far more mortgage securities before the financial crisis.
