CitiGroup Expand its Plans by 7 Billion$ in Settlements

Citigroup and the Justice Department have agreed to a $7 billion deal that will settle a federal investigation into the mortgage securities the bank sold in the run-up to the financial crisis, Michael Corkery writes in DealBook. The deal, announced on Monday morning, includes a $4 billion cash penalty to the Justice Department ‒ the largest payment of its kind ‒ as well as $2.5 billion in so-called soft dollars earmarked for aiding struggling consumers and $500 million to state attorneys general and the Federal Deposit Insurance Corporation. The bank, which is scheduled to announce second-quarter earnings at 8 a.m., said the settlement would result in a pretax charge of $3.8 billion before taxes in the period.
The deal caps months of contentious talks that began with a $363 million offer by Citigroup followed by a $12 billion demand from the Justice Department, a gap that stemmed from the radically divergent methods used to calculate the cost of the settlement, DealBook’s Ben Protess, Jessica Silver-Greenberg and Michael Corkery write. Citigroup linked its initial offer to the bank’s relatively small share of the market for mortgage securities. But the Justice Department rejected that argument, emphasizing instead what it saw as Citigroup’s level of culpability based on incriminating emails and other evidence it had uncovered.
The Irish drug maker Shire said on Monday that its board was prepared to recommend an improved takeover bid of 53.20 pounds a share, the equivalent of about $53 billion, that it received over the weekend from AbbVie, Chad Bray writes in DealBook. The latest offer is the fifth revised bid by AbbVie, which is based in Chicago.

The deal, if completed, would allow AbbVie to reincorporate in Britain and save millions of dollars in taxes, a process known as an inversion. Shire has its headquarters in Ireland and is listed in London. AbbVie is hoping to reach a deal for Shire before July 18, when it will have to make a firm offer or walk away for up to six months under British takeover rules.

Mario Draghi, the president of the European Central Bank, testifies on economic and monetary development before the European Parliament’s Committee on Economic and Monetary Affairs at 1:30 p.m. in Strasbourg, France. Happy Bastille Day.

The debt settlement industry, already accused of questionable tactics related to mortgages, has found a gold mine of new customers: those with student debt, Rachel Abrams and Jessica Silver-Greenberg write in DealBook. Federal and state regulators are now finding new instances of abuse as these debt settlement companies shift from mortgage and credit card debt to student loans.

On Monday, Illinois is expected to become the first state to bring legal action against debt settlement companies in connection with their student loan practices, contending in two separate lawsuits that Broadsword Student Advantage and First American Tax Defense duped vulnerable borrowers into paying for help that never arrived. The companies often misled customers about fees, according to the suits, and in some instances feigned affiliation with federal relief programs. In some cases, the Illinois attorney general contends, the companies charged customers for debt assistance that they could have received free from the Education Department.

Obamas pay $112,214 in federal taxes for 2012

President Barack Obama and first lady Michelle Obama paid $112,214 in federal income taxes on adjusted gross income of $608,611 in 2012—for an effective rate of 18.4 percent. They also contributed $150,034 to 33 charities, or 24.6 percent. And they paid $29,450 in Illinois income tax.

The White House released the first couple's tax returns Friday, before the April 15 deadline to file to the IRS.

What about the Bidens? One interesting nugget from their tax return is that Vice President Joe Biden and his wife, Jill, gave $2,000 in clothes, furniture and exercise equipment to charity. So someone out there could be walking in the vice president's shoes. Literally.

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The Obamas made less money than they did last year ($789,674) but also paid a lower effective federal income tax rate (it was 20.5 percent in 2011.)

Their largest charitable donation, $103,871, went to the Fisher House Foundation, which provides free or low-cost places to stay to veterans and military families getting care at military medical centers.

"The president believes we must reform our tax system which is why he has proposed policies like the Buffett Rule that would ask the wealthiest Americans to pay their fair share while protecting families making under $250,000 from seeing their taxes go up," White House press secretary Jay Carney said in a blog post. "Under the President’s own tax proposals, including limitations on the value of tax preferences for high-income households, he would pay more in taxes while ensuring we cut taxes for the middle class and those trying to get in it."

The Buffett Rule is named for billionaire investor Warren Buffett, who says that he pays a lower effective federal income tax rate than his secretary does.

So what happens if you plug the Obamas' income into the Buffett Rule calculator the president's re-election campaign used to pound Mitt Romney last year? (Yup, it's still live.) It's disappointing. Put in the income, the fact that the Obamas' are married with kids, hit "calculate," and you get: "Tax rates at the salary you entered vary significantly based on the level and nature of investment income, as well as other factors."

The Bidens reported adjusted gross income of $385,072 and paid $87,851 in federal income tax for an effective rate of 22.8 percent. They gave $7,190 to charity. And they paid $13,531 in Delaware income tax and $3,593 in Virginia income tax.

What about those "noncash charitable contributions"? Clothing, boots, kitchenware, glassware, furniture and exercise equipment, bicycles, toys, glasses and pottery. All worth about $2,000.

On Twitter, someone suggested that the Bidens could actually generate more income for their chosen charities:

For those of you who don't speak the language: What if the Bidens auctioned their goods online and gave the proceeds to charity?