Courtesy of Pam Martens.
(Part One. Part Two will run tomorrow.)
Even after a massive taxpayer bailout, Citigroup would continue to honor its $400 million, 20-year commitment and pay out an installment of $20 million to have the new Mets’ baseball stadium named Citi Field. (Graphic by Elves at Wall Street On Parade.)
When the U.S. taxpayer bailed out Citigroup and its two billionaire shareholders (Saudi Prince Alwaleed bin Talal and Sandy Weill, the company’s former Chairman and CEO), the public was unaware of just how financially corrupted the firm had become. We have those perpetually invisible hands of lawyers at the SEC and Citigroup to thank for that.
In this December 14, 2007 letter, Gary Crittenden, CFO of Citigroup at the time, responds to questions of serious financial irregularities posed by Kevin Vaughn, Branch Chief at the time of the SEC. Pages 22 through 32 of this correspondence have been completely redacted. They are still redacted after the U.S. taxpayer pumped $45 billion into the firm, over $300 billion in loan guarantees, and over $2 trillion in absurdly low cost loans from the Federal Reserve Bank of New York, where Sandy Weill sat on its Board of Directors from January 2001 through December 2006.
One question that is not redacted, just the answer from Citigroup, was whether the firm had changed how it was valuing its assets. We still don’t know the answer to that pivotal question almost five years later.
On July 29, 2010, over two and one half years after Vaughn’s questions were posed, after almost $2.5 trillion had been pumped into Citigroup to prop it up, we finally learned what had been on Mr. Vaughn’s mind in December of 2007. Citigroup had lied about its subprime mortgage loan exposure by $39 billion, not just verbally to investors, but in the financial statements it filed with the SEC. While financial fraud of this magnitude would typically be worthy of jail time, the SEC delivered minor slaps on the wrists to just two individuals. Gary Crittenden, the CFO paid $100,000; Arthur Tildesley, the head of Investor Relations, paid $80,000. Citigroup paid the pittance of $75 million. (Remember, when the Controller of New York State took on Citigroup over its fraudulent research practices, it settled for $2.65 billion.)
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