Will Anyone Be Punished For Citibank’s $40 Billion Subprime Lie?

[marmar]

via AlterNet:



Posted by Zach Carter at 1:04 pm
August 17, 2010

Will Anyone Be Punished For Citibank’s $40 Billion Subprime Lie?
Posted by Zach Carter on @ 1:04 pm


Finally, some good news on Wall Street accountability. A federal judge is holding up the SEC’s effort to let Citigroup’s top executives off the hook for misleading their own shareholders about $40 billion in subprime debt.

If Citi executives did what the SEC says they did, then the company’s top managers are guilty of both civil and criminal fraud. But regulator isn’t even going after some of the executives, while letting others off with a penalty that amounts to a rounding error on their bonuses. The proposed settlement is a stunning and shameful declaration of deference to the nation’s top financiers, a literal get-out-of-jail free card for bankers who not only wrecked the economy, but—according to SEC allegations—broke the law to do it.

In 2007, when investors all over the world were justifiably freaking out about subprime mortgages, Citi executives bragged about their relatively limited exposure to the crisis: Everything was going to be fine, because Citi had only $13 billion in subprime holding! It was true—Citi did have $13 billion in subprime mortgages. The trouble was, Citi also had about $40 billion more in subprime mortgage exposure included in mortgage-backed securities and other fancy financial instruments. And according to the SEC, top management at Citi knew about the extra $40 billion in subprime holdings (it’s not like it got lost in the couch cushions), and went around parading the $13 billion figure anyway.

Lying to your shareholders about the most pressing business issue of the decade is an one of the worst things a business executive can do. It’s also a crime, one for which all of Citi’s top officers can be implicated—again, if the allegations are true—thanks to the Sarbanes-Oxley Act, the landmark corporate reform law that Congress passed after the Enron and WorldCom scandals. That law required the top executives of every major corporation to personally sign-off on their company’s accounting statements. If anything false is in there, or anything important is left out, then these managers are personally accountable, by law. .............(more)

The complete piece is at: http://blogs.alternet.org/speakeasy/2010/08/17/will-anyone-be-punished-for-citibanks-40-billion-subprime-lie/

[Jackpine Radical]

1. Yes, of course someone will be punished.

Us.

[MannyGoldstein]

2. Indeed

I wonder what kind of wine and hors d'oeuvres the bankers and Obama are nibbling tonight?

[DirkGently]

3. We can't punish the "talent," or Atlas will shrug, and they'll take their

"wealth creation" abilities elsewhere. Gads.