Photo: Michelle Tribe
The extent of legal troubles for banks surrounding loans and mortgages are never ending—the details behind a $158 million Citigroup settlement over its lending practices are out, via Bloomberg.Apparently, Citigroup was still engaging in loan practices that got the world in this whole financial crisis mess in the first place. A whistleblower named Sally Hunt, who worked in quality control at Citi, said she decided to pursue charges against the bank when she realised the people in charge were essentially bullying employees to neglect obvious issues with loans that the bank had issued. Hunter said she found fake employer forms and alter tax documents, among other problems, in loans that landed on her desk.
Hunt’s co-workers, instead of checking for fraud or making reports about underwriting defects to the FHA as required, argued with her over the soundness of the loans, she said. Employees who acted as “gatekeepers” applied “what they describe as ‘brute force’ to pressure Citi’s quality control managers” into downplaying defects, according to the government’s complaint.
Citi also allegedly offered bonuses and publicly rewarded quality control officers who challenged negative loan reviews and turned them around, which humiliated many others who were doing more legitimate work.
Some good news does come out of the settlement though—Hunt will collect $31 million of the $158 million for her role in alerting federal authorities to the bad loan practices.