By James McKee
Banking giants Allstate and Citigroup are entering a lawsuit in which Allstate is alleging wrongdoing by Citigroup with regard to its handling of mortgages. Allstate is attempting to recover nearly 2 billion dollars worth of securities that it claims were lost due to misleading data regarding mortgage debt purchases. Allstate alleges that Citigroup and its umbrella companies deceived them regarding the supposed stability of the mortgage debt in question. These securities were actually highly volatile time bombs, which Citigroup is believed to have been aware of in this case by the plaintiffs. While it stands to reason that any investment has some inherent risks misleading an investor can result in adverse consequences in some instances.
Citigroup is believed to have been all-too aware of the rate of default at which its loans were experiencing, despite this they promoted and sold this toxic debt to companies such as Allstate. Legal battles between titans such as Allstate and Citigroup do not bode well for the US economy and no matter what the ruling it will have an adverse affect on the USD. The number of lawsuits resulting from large companies deceiving one another has only risen in recent months leading many to question what the eventual consequences of these conflicts will be.
One has to beg the question on a matter of principle in business, if someone knowingly sells something “toxic” does that make them liable for the other party’s loss if there was no promise regarding the return on investment? While the numbers may have been misleading on Citigroup’s side of the equation one has to question what Allstate’s responsibility was in this situation with regard to analyzing their investment. Those on the forex currency exchange should pay careful attention to large lawsuits such as these because a ruling in either direction has a negative impact on the USD and the market at large.
About the Author
Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the forex exchange rates regularly.
