After opening down, shares in Citigroup (NYSE:C) are now up. But breaking news could send the stock in either direction today.

This just in
Financial Times is reporting that Citi has settled a major lawsuit with the Federal Housing Finance Agency. The suit accused Citi and 16 of its peers of selling Fannie Mae and Freddie Mac bad mortgage-backed securities from 2005 to 2007, the peak of the country's subprime-lending boom.

There's no official word yet on the final cost, but if precedent from similar settlements holds for this case, the superbank might pay out $3.5 billion. Citi had previously been fighting the suit tooth and nail, and is the first of the big banks to settle. 

A glass half full or half empty
Someone bullish on Citi might see the news of this big settlement as evidence that the superbank has taken yet another step in shedding its financial-crisis downside: Counting from the collapse of Bear Stearns in March of 2008, we're more than five years out from the start of the financial crisis. At this point, how many more big settlements like this could still be looming out there?

A Citi bear might point at this and say, "I told you so: These big, irresponsible banks that blew up the global economy are still loaded with ticking time bombs, just waiting to go off and suck the bottom lines dry."

Both viewpoints are understandable. I happen to be in the optimist's camp, and I see this move by Citi as a positive development.

CEO Michael Corbat is a smarty, and if he's the first of his peers to settle this suit, I tend to believe he's seen the writing on the wall and is making a move to put this nasty piece of crisis-related business behind him and his bank. Who knows, by settling first, Corbat may have even been cut some slack on the possible payout by the feds.

There's no doubt that $3.5 billion is a lot of money. I sincerely hope this is the last we'll see of crisis-related payouts of this magnitude. An hour into the trading day, Citi's stock is still in the green. So far at least, the optimists are carrying the day. 

Fool contributor John Grgurich owns shares of Citigroup Follow John's dispatches from the not-so-muddy trenches of high-finance and big-banking on Twitter @TMFGrgurich.

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