Citi to Pay $158 Million in Mortgage Settlement. Citi Joins Goldman And JPMorgan In Settling Fraudulent And Misleading CDO Practices: Wristslap Costs $285 Million. And so Citi becomes the third firm after Goldman and JPM to put all their gross CDO criminal (wait, allegedly, they neither admitted nor denied) activity behind them with a $285 million wristslap. Citigroup will pay USD 285mln to settle SEC charges for misleading investors about selling CDOs related to housing market, according to SECCitigroup's main US broker-dealer unit misled investors about USD 1bln CDO tied to US housing market, in which Citigroup bet against investors.Citigroup bet against investors as housing market showed signs of distress, SEC saidCDO defaulted, Citigroup made $160m in fees/trading profits$285m will be returned to investors, SEC says in statementSEC also faults Citigroup employee Brian Stoker and Credit Suisse portfolio manager Samir H.
Bhatt We leave it up to readers to calculate how much in bonuses was paid at GS, JPM and Citi over the past 4 years. It is unclear if the Citi fine used will be courtesy of FDIC-backed TLGP notes still on Citi's books. Kenneth R. Citigroup Mortgage Division Agrees to Pay $158.3 Million in HUD Settlement. Citigroup Inc. (C) agreed to pay $158 million to settle a whistle-blower’s claims that a unit of the third-biggest U.S. lender deliberately reduced oversight of its loan origination process, causing a surge in borrower defaults.
Manhattan U.S. Attorney Preet Bharara today said the federal government had joined and resolved a civil lawsuit alleging that the unit, CitiMortgage, violated the requirements of a Federal Housing Administration program that allowed the lenders to decide for which of their home loans they would be federally insured against loss. CitiMortgage admitted to falsely stating that some loans met FHA and U.S. “For far too long, lenders treated HUD’s insurance of their mortgages like they were playing with house money,” Bharara said in the statement. U.S. 49-State Settlement The settlement is independent of the $25 billion, 49-state settlement with the biggest U.S. mortgage lenders announced by the states’ attorneys general on Feb. 9. 30,000 Loans Das declined to comment. Citigroup MBS Settlement Rejected by Judge Who Says Public Deserves Truth.
Citigroup Inc. (C)’s $285 million settlement with the U.S. Securities and Exchange Commission over a mortgage-backed securities fund was rejected by a federal judge who said he hadn’t been given enough facts to approve it. U.S. District Judge Jed Rakoff in Manhattan rejected the settlement in an opinion released today and set a trial date. He has criticized the SEC’s practice of letting financial institutions such as New York-based Citigroup settle without admitting or denying liability. Citigroup, the third-biggest U.S. lender, agreed last month to resolve a claim by the SEC that it misled investors in a $1 billion collateralized debt obligation linked to subprime residential mortgage securities.
“It’s a frontal assault on the ‘neither admit nor deny’ approach,” said J. Danielle Romero-Apsilos, a spokeswoman for Citigroup, said the bank disagreed with Rakoff’s ruling. ‘Fair and Reasonable’ ‘Public Interest’ BofA Settlement SEC Claims Unproved Allegations ‘Established Practice’ Judge Jed Rakoff Berates SEC for Secret Settlement Deals, in Judicial Filing. I’m actually really enjoying the last stand of Jed Rakoff. He’s the federal judge who has engaged in a lonely crusade against the SEC’s practice of slap-on-the-wrist settlements against the nation’s largest financial firms. The SEC and Citigroup took Rakoff to court, essentially, to get their settlement on some mortgage-backed securities deals approved.
Rakoff refused to approve the deal, because, among other things, he objected to the fact that Citi didn’t have to admit wrongdoing, and he was barred from seeing the necessary evidence to determine the fairness of the deal. Rakoff has a lawyer now, and he argued before the 2nd Circuit Court of Appeals that he required more information to properly conduct oversight: U.S. Sadly, the Second Circuit is likely to side with Citi and the SEC, if we go by their preliminary ruling in the case. Rakoff happened to preside over the jury trial against Citi employee Brian Stoker, on these very deals. Citigroup to Pay $285 Million to Settle SEC Charges for Misleading Investors About CDO Tied to Housing Market. Washington, D.C., Oct. 19, 2011 – The Securities and Exchange Commission today charged Citigroup’s principal U.S. broker-dealer subsidiary with misleading investors about a $1 billion collateralized debt obligation (CDO) tied to the U.S. housing market in which Citigroup bet against investors as the housing market showed signs of distress.
The CDO defaulted within months, leaving investors with losses while Citigroup made $160 million in fees and trading profits. The SEC alleges that Citigroup Global Markets structured and marketed a CDO called Class V Funding III and exercised significant influence over the selection of $500 million of the assets included in the CDO portfolio. Citigroup then took a proprietary short position against those mortgage-related assets from which it would profit if the assets declined in value. Citigroup did not disclose to investors its role in the asset selection process or that it took a short position against the assets it helped select.
Kenneth R. Did Citi Get a Sweet Deal? Bank Claims SEC Settlement on One CDO Clears It on All Others. A $285 million SEC settlement appears to wipe the slate clean on Citi’s multi-billion-dollar CDO business. In the run-up to the global financial collapse, Citigroup’s bankers worked feverishly to create complex securities. In just one year, 2007, Citi marketed more than $20 billion worth of deals backed by home mortgages to investors around the world, most of which failed spectacularly. Subsequent lawsuits and investigations turned up evidence that the bank knew that some of the products were low quality and, in some instances, had even bet they would fail. The bank says it has settled all of its potential liability to a key regulator – the Securities and Exchange Commission -- with a $285 million payment that covers a single transaction, Class V Funding III. ProPublica first raised questions about the deal [1] in August 2010.
In announcing a case, the SEC said it had identified one low-level employee, Brian Stoker, as responsible for the bank’s misconduct. Did Citi get a sweet deal? BREAKING: Victory for Minneapolis mom over Citibank's foreclosure effort. John wrote the other day about Nick Espinosa’s mom. She was behind on her mortgage, finally was able to get the money together, but Citibank said “no” – they refused to accept her mortgage payment, and instead were going to sell her house tomorrow. That is, until Nick and a lot of his friends stepped up and saved the day.
Nick Espinosa is an organizer with Occupy Homes MN, where he’s helped people facing foreclosure and eviction fight off the bank and keep their homes for the last eight-plus months. Nick is also well-known in activist circles for being the creator of the Glitter Bomb as a tactic in support of LGBT rights.
In short, he’s a great activist who’s putting his full being into helping others. Unfortunately while Nick had been helping other families in his community, his mother, Colleen McKee Espinosa, received a foreclosure notice. This is a tremendous victory for Nick and Colleen and their community, as well as the entire Occupy Our Homes movement. Why Not Break-Up Citigroup? By Simon Johnson Earlier this week, Richard Fisher – President of the Dallas Federal Reserve Bank – captured the growing political mood with regard to very large banks: “I believe that too-big-to-fail banks are too-dangerous-to-permit.”
Market-forces don’t work with the biggest banks at their current sizes; they have great political power and receive almost unlimited implicit subsidies in the form of protection against downside risks – particularly in situations like now, with the European financial situation looking precarious. “Downsizing the behemoths over time into institutions that can be prudently managed and regulated across borders is the appropriate policy response. Then, creative destruction can work its wonders in the financial sector, just as it does elsewhere in our economy.”
Mr. What then is the case in favor of keeping mega-banks at their current scale? Citi is one of the world’s largest banks. Is there indication in Mr. The engines of growth, according to Mr. John Reed on Big Banks' Power and Influence. BILL MOYERS: Welcome to our third episode about the powerful players in high places who rewrote the rules of American politics and the economy.
You can read all about it in this book: Winner-Take-All Politics: How Washington Made the Rich Richer and Turned Its Back on the Middle Class. If you missed the first two programs, you can see them on our new website, BillMoyers.com. The first is with Winner-Take-All authors Jacob Hacker and Paul Pierson; the second with David Stockman and Gretchen Morgenson on “crony capitalism.” In this edition, we’ll look at a seminal moment when Wall Street and Washington stacked the deck against the rest of us. Remember, this is the political equivalent of a crime story, a mystery. How is it that our economy stopped working for the broad majority of Americans? How did our political and financial class shift the benefits of the economy to the very top, while saddling us with greater debt and tearing new holes in the safety net? Nicely, thank you. Mark Ames: Failing Up With Citigroup’s Dick Parsons. Yves here. Even though I pointed to this article yesterday, it is such a prototypical story of a type of success peculiar to Corporate America that I thought it warranted being featured.
By Mark Ames, the author of Going Postal: Rage, Murder and Rebellion from Reagan’s Workplaces to Clinton’s Columbine. Cross posted from eXiled. This article was first published in The Daily Banter Last month, shareholders finally rebelled against Citigroup, the worst of the Too Big To Fail bailout disasters, by filing a lawsuit against outgoing chairman Dick Parsons and handful of executives for stuffing their pockets while running the bank into the ground. Anyone familiar with Dick Parsons’ past could have told you his term as Citigroup’s chairman would end like this: Shareholder lawsuits, executive pay scandals, and corporate failure on a colossal scale. It’s the Dick Parsons Management Style. It’s a basic question that goes to the heart of Dick Parsons’ rise to the top. U.S. Why Dick Parsons? Citigroup stint shadows Obama's new staff chief. President Obama talks with chief of staff Bill Daley and OMB director Jack Lew before announcing that Lew will become his next chief of staff Credit: White House/Pete Souza COMMENTARY Are there any high-minded presidential henchmen out there who haven't worked on Wall Street?
Jack Lew, whom President Obama is tapping to as his new chief of staff, was until 2009 a top executive at a controversial Citigroup (C) unit. Counting Obama's first chief wrangler, current Chicago Mayor Rahm Emmanuel, who also did a turn as an investment banker, that's three gatekeepers in a row who have spent time on the Street. Not that there's anything wrong with that. Actually, there is, and it isn't just optics. Lew, a seasoned Washington player who currently heads the White House Office of Management and Budget, is, on paper, highly qualified for his latest post, which he will assume by the end of the month.
That's the point. The Citi division ultimately lost billions. . © 2012 CBS Interactive Inc.. Citigroup Whistle-Blower Says Bank’s ‘Brute Force’ Hid Bad Loans From U.S. Four years after rotten mortgages helped trigger a global financial crisis, Sherry Hunt said her Citigroup Inc. quality-control team was still finding flaws in new loans that included altered tax forms, straw buyers and borrowers who listed fictitious employers. Instead of reporting the defects to the Federal Housing Administration, the bank saddled the agency with losses by falsely declaring the loans fit for its federal insurance program, according to a complaint filed yesterday by the U.S. Attorney’s Office in Manhattan. Citigroup agreed to pay $158.3 million to settle the claims, and admitted that it certified loans for FHA backing that didn’t qualify. Hunt, who filed a sealed lawsuit against New York-based Citigroup in August that the government joined, will collect $31 million of that sum -- before taxes and attorney’s fees -- as a whistle-blower, she said in an interview yesterday.
Inspector General The inspector general for the U.S. ‘Beating Us Up’ Mark C. Improvements Undertaken. Pandit Does Davos, 0.1% Gloat, Madness Reigns: Jonathan Weil. Sometimes a single fact stands out amid all the clutter, offering a flash of insight and clarity. Here is one of them: Citigroup Inc. Chief Executive Officer Vikram Pandit is a co-chairman of the World Economic Forum’s annual meeting this week in Davos, Switzerland. At first blush, the notion might seem almost ho-hum, a non-event. Upon further consideration, this looks like it can’t possibly be right. Then it turns out, much to our amazement, that the story is accurate, confirming once again that our world is stark mad. It’s one thing for Citigroup to blow itself up so spectacularly that it needs multiple taxpayer bailouts to stay afloat. It’s stunning when you think about it: How does Pandit, who owes much of his fortune to the American public’s largess, wind up being showcased as a paragon of leadership and free enterprise, little more than a year after the U.S.
And what message are the rest of us are supposed to take away from this? Global Elites Right Man. Tale of Two Citis. It took an obscure magazine to reveal how Sandy Weill built his empire on subprime lending. Why? A long time ago, before the turn of the century, subprime lending was a marginal business—economically, ethically, every way. The business was basically left to the hustlers. Financial carrion. Birds of prey. Let’s face it, only the likes of Commercial Credit Corp., of Baltimore, would sell 40 percent loans to barely literate residents of Mississippi’s Noxubee and Lowndes* counties, tacking on credit insurance to bring the rate up to 70 percent.
Whoops! And Associates First Capital? But, surely, Citigroup is marginal in the subprime industry, and the subprime industry is marginal to Citi, by some measures the world’s largest bank. Actually: Citigroup has established itself as perhaps the most powerful player in the subprime market by swallowing competitors and employing its vast capital resources and its name-brand respectability.
Yes, you read that right. What’s the source? No?