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Abdullah Abdullah stops short of declaring an Afghan government

KABUL, Afghanistan — After hours of pitched political drama that sent President Barack Obama and other officials scrambling to calm a surge of Afghan factional hostility, the presidential candidate Abdullah Abdullah walked a perilous line Tuesday, threatening to declare his own government even while urging his frenzied supporters to give him time to negotiate.

Just a day before, the Afghan Independent Election Commission released preliminary results that showed Abdullah, who led in the first round, more than a million votes behind his rival, Ashraf Ghani Ahmadzai.

Overnight, supporters from both political camps demonstrated in the streets, hailing their candidates as the legitimate president despite the caution of election officials that the results were not final. Several powerful allies of Abdullah have publicly called for him to form a breakaway regime, incensed that the government would release results they say have been engineered by Ahmadzai, the election commission and President Hamid Karzai.

But Abdullah stopped just short of taking that action Tuesday. Instead, he asked his supporters gathered in Kabul for more time to decide the right course of action, citing the urging of Obama and Secretary of State John Kerry, who is coming to Afghanistan on Friday in response to the crisis.

Lurking beneath the surface is a growing fear that long simmering ethnic tensions could erupt into violence if the crisis is not resolved.

—Azam Ahmed, The New York Times

Citi said to be close to settling inquiry into mortgage securities

Citigroup and the Justice Department are nearing a deal that could cost the bank roughly $7 billion to settle a civil investigation into the sale of mortgage investments, people briefed on the matter said Tuesday.

The settlement, which is expected to be announced within the next week, caps months of negotiations that grew so tense in June that the Justice Department threatened to sue if the bank did not agree to the government’s proposed penalty. The deal would be made up of a monetary penalty and relief for homeowners.

The two sides are still working out some details. Citi recently raised its cash offer from $1 billion to $4 billion, according to a person briefed on the matter.

The remainder of the $7 billion would include so-called soft dollar penalties, including mortgage modifications and other forms of relief to homeowners, and fines to state attorneys general involved in the case.

The total amount will almost certainly exceed the $2 billion that some Wall Street analysts initially estimated that Citigroup would be liable to pay, though more recent estimates have put the number closer to $6 billion.

The large settlement shows how the government has been able to ratchet up the amount of money it can demand from banks for their roles in selling securities tied to shoddy mortgages whose values plummeted during the financial crisis.

Citigroup was not nearly as big a player in this business as JPMorgan Chase, which agreed to a $13 billion settlement with the Justice Department last year.

Lawyers for the big banks say privately that federal prosecutors appear to have scrapped the model used in that case and are demanding penalties that are far more punitive than what JPMorgan paid.

—Michael Corkery and Ben Protess, The New York Times