How Citibank Dumped Lousy Mortgages On The Government

A lawsuit, which Citibank just settled for $158 million, reveals how the bank pushed risky loans onto the government's books.

Citigroup agreed yesterday to pay $158 million to settle a lawsuit [1] over bad loans that the bank passed on to the Federal Housing Administration to insure. The whistle-blower who originally brought the case, Sherry Hunt, an employee of Citi's mortgage department, said the company actively undermined the process that was supposed to check for fraud in order to push through reckless loans and get higher profits.

The suit itself makes for good reading [2]. We've pulled out the juiciest bits, and explain just what Citi appears to have been doing.

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