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Archive for the ‘Citigroup’ Category

Citi’s $7Bln Settlement: Truth and Justice Delayed Is Truth and Justice Denied

Posted by Larry Doyle on July 14th, 2014 11:40 AM |

Running down the clock used to be a strategy employed by renowned North Carolina basketball coach Dean Smith to win many a game. College basketball ultimately employed a shot clock to keep the games going.

Perhaps the Department of Justice should also have some sort of effective ‘shot clock’ imposed upon it in certain circumstances. Why so?

Just look at the announcement today (July 14, 2014) that Citigroup is paying a $7 billion fine to settle an array of egregious practices involved in transactions the firm brought from 2003 to 2008.  The WSJ offers that AG Eric Holder will provide the following details: (more…)

Richard Bowen: The Corruption Extends to the Highest Levels of Government

Posted by Larry Doyle on September 23rd, 2013 10:02 AM |

I thank the many devoted readers of Sense on Cents who made sure I was aware of a riveting, must-read article in yesterday’s New York Times written by Bill Cohan, a Wall Street-Washington critic without peer.

Cohan writes of the travails of Richard Bowen, former whistleblower at Citigroup, who ran headlong into the fortress manned by Robert Rubin and friends. Bowen was a Citi employee who blew the whistle regarding the preponderance of defective mortgages running through the Citi pipeline.

He brought the knowledge of this activity to the highest perch within the bank including the attention of Robert Rubin. How was he treated? With what most would define as ‘the silent treatment.’ Once silenced, he was then subsequently shown the door.

While Bowen was pushed out of Citigroup back in 2009, he has not been silenced since then.  (more…)

Whom Should Pandit Thank for “Resignation?”

Posted by Larry Doyle on October 16th, 2012 3:29 PM |

Speculation is running rampant as to whether Citigroup’s Vikram Pandit voluntarily resigned this morning or was pushed off the ledge?

It defies logic to think that Pandit and his sidekick John Havens decided that it was simply time to turn the keys to the store over to new leaders. I also do not think for a second that these “resignations” were the result of a clash with the board over Citi’s strategy and performance.

Then what prompted these seismic shifts within the executive offices of Citigroup?  (more…)

Sherry Hunt: A True American Hero

Posted by Larry Doyle on June 9th, 2012 9:08 AM |

“This case demonstrates that the notion that the bailed-out banks have somehow found God and have reformed their ways in the aftermath of the financial crisis is pure myth,” he says.

“Sherry is an absolutely fantastic lady who knows what she’s doing. She has a conscience. I have the highest regard for her.”

At this point in our nation’s history, America needs some real heroes.

Certainly those who had put and continue to put their lives in harm’s way for our freedom and liberty are true American heroes. What about in the world of finance, though?  (more…)

Judge Huvelle: “Why Would I Find This Fair and Reasonable?”

Posted by Larry Doyle on August 18th, 2010 2:09 PM |

Wall Street has a funny way of meting out justice. All too often, investors are left with little more than ‘caveat emptor’ when it comes to engaging large Wall Street institutions. Beyond that, the SEC and FINRA are often critiqued for being more closely aligned with the industry than with investors. I was reminded of this fact when reading last week that the SEC settled with Citigroup for a token $75 million regarding Citi’s disclosure, or lack thereof, of its sub-prime holdings in the midst of our economic crisis.

My ‘sense on cents’ view of the world made me think that Citi got off awfully cheap for having misrepresented its financial positions. If $75 million is all it costs for misrepresentation of financial documents, then America should ready itself for a whole lot of misrepresentation. Thankfully, a judge threw a quick yellow flag on the field while indicating that this play needed further review. (more…)

Citi’s Richard Bowen Exposes Wall Street’s ‘Garbage In, Garbage Out’

Posted by Larry Doyle on April 7th, 2010 3:41 PM |

Does anybody have any doubt that massive fraud within our mortgage industry played a large part in our current economic crisis? America continues to suffer from the fakers and phonies within our financial regulatory structure (including Alan Greenspan) who fail to accept responsibility for their shortcomings and the resultant frauds.

The mortgage fraud grew over time in order to feed the Wall Street machine the collateral it needed to execute a wide array of structured transactions. This need for increasing volume of mortgage originations was a critical point in one of my earliest blog posts written in November 2008, “The Wall Street Model is Broken… and Won’t Soon be Fixed!!” I wrote: (more…)

Citigroup: The Blind Leading the Blind

Posted by Larry Doyle on April 7th, 2010 1:28 PM |

When in doubt, hire a consultant.

When something fails, blame the consultant.

Shirk responsibility and pass the buck.

When will somebody with a set of balls on Wall Street stand up and take responsibility for the massive failures of risk management and business execution which led to the economic crisis which brought our country to its knees?  (more…)

Citigroup Still Milking Uncle Sam

Posted by Larry Doyle on September 16th, 2009 11:42 AM |

A number of banking institutions have repaid Uncle Sam’s TARP funds. The truth be told, a few of these institutions never wanted Uncle Sam’s money in the first place. Now we learn that the biggest financial beneficiary of Uncle Sam’s largesse, that being Citigroup, wants to begin discussions for Uncle Sam’s exit.

Be mindful that Uncle Sam (that’s you and me, boys and girls) owns upwards of 40% of Citi and that this giant would be dead and buried without Sam’s bailout. If I am Citi, I would also like to get out from under the grand old Uncle’s watch. The Wall Street Journal highlights this story in writing, Citigroup Explores Bid to Pare U.S. Stake:

Citigroup Inc., eager to shed the stigma of being a ward of the state, is working on a plan to reduce the U.S. government’s 34% stake.

Top Citigroup executives have been devising plans for a possible multibillion-dollar stock offering in which the New York company would issue new shares to the public, while the Treasury Department would sell at least a portion of its Citigroup holdings, according to people familiar with the matter.

[citigroup bailout]

Citigroup hasn’t held in-depth talks with the government. Over the weekend, Citigroup called a Treasury official and said the company wanted to start talking about paring down the Treasury investment, according to people familiar with the matter. On the call, Citigroup officials said they planned to raise outside capital in order to repay the outstanding bailout funds. Treasury officials responded to Citi that they didn’t object to the company paying back Washington as long as Citi first raised offsetting capital, these people said.

It is regrettable that the WSJ did not juxtapose this story of Citigroup’s grand vision to regain its independence with the fact that Citigroup continues to milk Uncle Sam via the FDIC-backed debt program. What is that?

The FDIC-backed debt allows Citigroup to issue debt which is effectively government guaranteed. In the process, Citi generates a significant cost savings because this debt falls into the ‘heads we win, tails you lose’ category. How much of this ‘milk’ did Citi just suck? Try a nice steady stream totalling $5 billion. The Financial Times sheds some light on this ‘stall’ in writing, Citi Raises $5 Billion in Bail-Out Bonds:

People close to the situation said Citi was in early talks with the US Treasury over a plan that would enable the company to raise capital by selling shares and enable the authorities to pare their holding.

But Citi’s decision to sell two and three-year bonds backed by the Federal Deposit Insurance Corporation could reinforce the perception that the bank, which has received $45bn in federal aid, is still not back to full health.

The hypocrisy of it all is par for the course, but for Citi, this milk tastes Mmmm…Mmmmm good!!


Pinnacle Receives Auction-Rate Securities Settlement; What about Every Other ARS Investor?

Posted by Larry Doyle on August 31st, 2009 12:34 PM |

How can auction-rate securities investors receive liquidity from the remaining $165 BILLION in frozen ARS securities?

Let’s review a recently announced settlement that Pinnacle Airlines negotiated with Citigroup. Bloomberg reported this morning, Pinnacle Airlines Flight From Auction Rate Costs $16 Million. Pinnacle is under severe cash constraints with a $109 million note maturing in early 2010. Bloomberg provides details how Pinnacle received liquidity along with a call option to repurchase the ARS from Citigroup at the same price it is selling the ARS. What does it all mean? Bloomberg highlights:

Pinnacle received $112 million from Citigroup Global Markets Inc. for its $128 million auction-rate portfolio, according to Williams. The $16 million loss amounted to a 12.5 percent discount. The deal allows Pinnacle to buy the securities back at the same discount anytime during the next three years, Williams said.

“We are pleased to have been able to provide a liquidity solution to our client,” said an e-mailed statement from Danielle Romero-Apsilos, a spokeswoman for Citigroup, which sold Pinnacle the auction-rate securities.

Sense on Cents asks the following questions:

1. Would Citigroup offer this settlement to every other investor to which it sold ARS?

2. What do ARS investors who are regular readers of Sense on Cents think of this settlement?

3. Does this settlement preclude investors from participating in a larger settlement that may include penalties?

4. Why shouldn’t other banks, brokers, and money managers who sold and marketed ARS in a fraudulent fashion be mandated by the courts to provide a temporary liquidity facility similar to this? If these entities, which engaged in the fraud, maintain they can not ‘afford’ this settlement, isn’t that a de facto admission of guilt and an ongoing perpetuation of the fraud?

When will ALL investors in auction-rate securities receive an expedited settlement which leads to full and total restitution? The feet dragging on behalf of issuers, banks, regulators, and the courts is a gross injustice of massive proportions.

Perhaps the claim embedded in the Amerivet Securities complaint against FINRA can help to unlock the ARS mess and expose the incestuous relationship between the financial self-regulator and Wall Street. At that point, perhaps ARS investors may move closer to receiving their funds and some justice from this fraud.


Uncle Sam Winks Again at Citigroup’s Credit Card Fees

Posted by Larry Doyle on August 20th, 2009 3:14 PM |

When a company, which is a ward of the state, increases credit card fees can it be said to be the equivalent of a tax increase? I believe it can. In that vein, Citigroup is raising taxes on its credit cards by initiating annual fees. The Wall Street Journal highlights this development and reports Citigroup to Initiate New Annual Fees on Some Credit Cards:

Citigroup Inc. is instituting annual fees on some current credit-card accounts in an attempt to offset strict new legislation that could dent its profits.

The move comes on the heels of several warnings from the banking industry, which has said that issuers would be forced to rewrite the playbook on plastic because new credit-card laws would take a bite out of their income.

Rates of between 20% and 30% aren’t sufficient for income purposes? The fact is, current card holders are paying for the undisciplined lending practices of the bank over the last 5 years.

These laws include new limits on interest-rate increases on existing balances and greater disclosures.

The legislation was written to prevent abusive practices on the part of the banks. The fact that it allows for the implementation of practices such as these paints the legislation as the equivalent of a ‘show trial.’ (more…)

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