| WASHINGTON, July 16
WASHINGTON, July 16 A U.S. Department of Justice
official on Wednesday told banks under investigation in
connection with mortgage securities sold before the financial
crisis to admit to misconduct and pay substantial penalties or
face lawsuits from the agency.
The warning from No. 3 Justice official Tony West comes
after a $7 billion settlement with Citigroup Inc and amid
talks with Bank of America Corp over similar claims.
"If an institution is unwilling to admit its wrongful
conduct in a statement of facts; or balks at paying a
substantial penalty that reflects that conduct; or refuses to do
right by those affected, then we will not shrink from litigating
as long as we must to fulfill our law enforcement mandate," West
said, according to the text of remarks he gave before the
Exchequer Club, a financial policy group in Washington.
The speech comes one day after Justice Department lawyers
met with Bank of America representatives about a potential
settlement, at which negotiators made little progress towards a
deal, according to a person familiar with the talks.
"Let me be clear: We do not investigate these matters
intending to settle them," West said in the speech, without
naming specific institutions. "I would not be surprised if we
were to see additional RMBS lawsuits in the future."
The Justice Department-led residential mortgage-backed
securities (RMBS) working group is leading multiple
(Reporting by Aruna Viswanatha; Editing by Cynthia Osterman)