Citigroup (C) Settles with FHFA

Shares of Citigroup Inc. (C) closed up +1.27 or +2.51 percent to $51.79 on Tuesday after news that the company had settled a lawsuit with the Federal Housing Finance Agency or FHFA. The settlement filing, announced in U.S. District Court in Manhattan on Tuesday, was one of several filings against Wall Street banks which are still pending. In the lawsuit, the FHFA had accused Citigroup of misleading two other federal agencies, Fannie Mae, and Freddie Mac into purchasing $3.5 billion in mortgage backed securities.

While the terms of the settlement were not disclosed, FHFA spokeswoman Stefanie Johnson stated that the settlement was "satisfactory" and that the agency, "remains active in settlement discussions with other parties that were subjects of these lawsuits." Daily Chart
Manhattan, New York based Citigroup is the result of the 1998 merger of Citigroup and financial conglomerate Travelers Group. With over 357,000 employees worldwide and more than $70 billion in annual revenues, Citigroup is the third largest bank holding company in the United States by assets. The FHFA lawsuit is one of 18 securities fraud cases which the FHFA filed in 2011 against Wall Street banks, which involve over $200 billion in mortgage backed securities sold by the banks to FNMA and FMAC. A separate lawsuit was settled against General Electric Co. (GE) back in January involving the purchase of $549 million in MBSs. The current settlement with the FHFA follows a major setback for Citigroup and the other 17 defendants in the lawsuits. In May of 2012, 2nd U.S. Circuit Court of Appeals Judge Denise Cote rejected an argument by UBS AG (UBS), that the agency had not filed the lawsuit in time. The decision of the appellate court was extended to include 14 other related cases before Judge Cote. The appeal brought by UBS alleged that the suit, brought in July of 2011 by the FHFA involving $6.4 billion in MBSs, was not timely in that the case involved 23 securitizations bought by Fannie Mae and Freddie Mac over a two-year period, which began in 2005. The appeal by UBS, alleged that the Housing Economic and Recovery Act that established the FHFA in 2008 gave the agencies three years to file its claim and did not supersede securities laws giving the plaintiffs three years from the time the specific acts of alleged wrongdoing were committed by the defendants. Citigroup stock has had an extremely good year, with the stock more than doubling since trading at under $25 per share in early June of 2012. The settlement of the case with the FHFA will take another obstacle out of the company's way and will most likely have a beneficial effect when the next earning report comes out on July 15th. With a PE of 19 and earnings per share of $2.72 in the trailing twelve months, Citigroup's potential for additional growth looks positive. Nevertheless, a downturn in the general market could potentially weigh on the stock, which has a Beta of 1.86. July's earnings release will be carefully watched by investors. Other News About C Citi Names New CEOs of CitiMortgage, Other Units Jane Frazier named head of CitiMortgage. Some Foreclosures Halted by Wells, Citi After New Federal Standards Citi and Wells Fargo halt some sales of distressed and foreclosed properties. Other Stocks in the News Apple's Tim Cook: Wearable Tech is 'Profoundly Interesting' CEO calls new wearable technology a game changer. SoftBank Gets National-Security Approval for Sprint Deal Softbank nears approval of merger with Sprint. Copyright 2013 by InvestorGuide.com, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA InvestorGuide.com, Inc.) or its employees responsible.

Published on May 29, 2013
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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