Archive for the ‘Citigroup’ Category
Sandy Weill: ONE DOLLAR OF CAPITAL! (Light)
Now I’ve heard it all.
This is the man who created the “bankster superstore”; he built Citigroup, he pioneered unlimited leverage and game-playing in the financial system, and this morning he repudiated it all and called for:
1. 100% mark-to-market (!) of all bankster assets.
2. A complete split between deposit-taking banks that make loans and investment banks that have no access to credit-money creation via revolving depository doors.
This takes the entire capital markets structure and makes it run on actual capital. No off-balance sheet anything, no derivative games, everything is marked to the market every single day.
This is ONE DOLLAR OF CAPITAL folks — “lite”, to an extent, for deposit-taking institutions, butabsolute for everyone else.
In Defining Hypocrisy, Weill, Who Led Repeal Of Glass Steagall, Now Says Big Banks Should Be Broken Up
Who is Sandy Weill? He is none other than a retired Citigroup Chairman, a former NY Fed Director, and a “philanthropist.” He is also the man who lobbied for overturning of Glass Steagall in the last years of the 20th century, whose repeal permitted the merger of Travelers of Citibank, in the process creating Citigroup, the largest of the TBTF banks eventually bailed out by taxpayers. In his memoir Weill brags that he and Republican Senator Phil Gramm joked that it should have been called the Weill-Gramm-Leach-Bliley Act. Informally, some dubbed it “the Citigroup Authorization Act.” As The Nation explains, “Weill was instrumental in getting then-President Bill Clinton to sign off on the Republican-sponsored legislation that upended the sensible restraints on finance capital that had worked splendidly since the Great Depression.” Of course, by overturning Glass Steagall the last hindrance to ushering in the TBTF juggernaut and the Greenspan Put, followed by the global Bernanke put, was removed, in the process making the terminal collapse of the US financial system inevitable. Why is Weill relevant? Because in a statement that simply redefines hypocrisy, the same individual had the temerity to appear on selloutvision, and tell his fawning CNBC hosts that it is “time to break up the big banks.” That’s right: the person who benefited the most of all from the repeal of Glass Steagall is now calling for its return.
Hypocrisy defined 5:20 into the interview below:
I am suggesting that [big banks] be broken up so that the taxpayer will never be at risk, the depositors won’t be at risk, the leverage of the banks will be something reasonable… I want us to be a leader… I think the world changes and the world we live in now is different from the world we lived in ten years ago.
How ironic is it then that at the signing ceremony of the Gramm-Leach-Bliley, aka the Glass Steagall repeal act, Clinton presented Weill with one of the pens he used to “fine-tune” Glass-Steagall out of existence, proclaiming, “Today what we are doing is modernizing the financial services industry, tearing down those antiquated laws and granting banks significant new authority.”
How ironic indeed. And how hypocritical for this person to have the temerity to show himself in public, let alone demand the law he ushered in, be undone.
Weill discussing all of the above and more with a straight face here:
For those curious to learn a bit more about Weill, here is some good reading:
Weill is the Wall Street hustler who led the successful lobbying to reverse the Glass-Steagall law, which long had been a barrier between investment and commercial banks. That 1999 reversal permitted the merger of Travelers and Citibank, thereby creating Citigroup as the largest of the “too big to fail” banks eventually bailed out by taxpayers. Weill was instrumental in getting then-President Bill Clinton to sign off on the Republican-sponsored legislation that upended the sensible restraints on finance capital that had worked splendidly since the Great Depression.
Those restrictions were initially flouted when Weill, then CEO of Travelers, which contained a major investment banking division, decided to merge the company with Citibank, a commercial bank headed by John S. Reed. The merger had actually been arranged before the enabling legislation became law, and it was granted a temporary waiver by Alan Greenspan’s Federal Reserve. The night before the announcement of the merger, as Wall Street Journal reporter Monica Langley writes in her book “Tearing Down the Walls: How Sandy Weill Fought His Way to the Top of the Financial World… and Then Nearly Lost It All,” a buoyant Weill suggested to Reed, “We should call Clinton.” On a Sunday night Weill had no trouble getting through to the president and informed him of the merger, which violated existing law. After hanging up, Weill boasted to Reed, “We just made the president of the United States an insider.”
The fix was in to repeal Glass-Steagall, as The New York Times celebrated in a 1998 article: “…the announcement on Monday of a giant merger of Citicorp and Travelers Group not only altered the financial landscape of banking, it also changed the political landscape in Washington…. Indeed, within 24 hours of the deal’s announcement, lobbyists for insurers, banks and Wall Street firms were huddling with Congressional banking committee staff members to fine-tune a measure that would update the 1933 Glass-Steagall Act separating commercial banking from Wall Street and insurance, to make it more politically acceptable to more members of Congress.”
At the signing ceremony Clinton presented Weill with one of the pens he used to “fine-tune” Glass-Steagall out of existence, proclaiming, “Today what we are doing is modernizing the financial services industry, tearing down those antiquated laws and granting banks significant new authority.” What a jerk.
Although Weill has shown not the slightest remorse, Reed has had the honesty to acknowledge that the elimination of Glass-Steagall was a disaster: “I would compartmentalize the industry for the same reason you compartmentalize ships,” he told Bloomberg News. “If you have a leak, the leak doesn’t spread and sink the whole vessel. So generally speaking, you’d have consumer banking separate from trading bonds and equity.”
Instead, all such compartmentalization was ended when Clinton signed the Gramm-Leach-Bliley Act in late 1999. In his memoir Weill brags that he and Republican Senator Phil Gramm joked that it should have been called the Weill-Gramm-Leach-Bliley Act. Informally, some dubbed it “the Citigroup Authorization Act.”
Gramm left the Senate to become a top executive at the Swiss-based UBS bank, which like Citigroup ran into deep trouble. Leach—former Republican Representative James Leach—was appointed by President Barack Obama in 2009 to head the National Endowment for the Humanities, where his banking skills could serve the needs of intellectuals. Robert Rubin, the Clinton administration treasury secretary who helped push through the Citigroup Authorization Act, was the most blatant double dealer of all: He accepted a $15-million-a-year offer from Weill to join Citigroup, where he eventually helped run the corporation into the ground.
Citigroup went on to be a major purveyor of toxic mortgage–based securities that required $45 billion in direct government investment and a $300 billion guarantee of its bad assets in order to avoid bankruptcy.
Weill himself bailed out shortly before the crash. His retirement from what was then the world’s largest financial conglomerate was chronicled in the New York Times under the headline “Laughing All the Way From the Bank.” The article told of “an enormous wooden plaque” in the bank’s headquarters that featured a likeness of Weill with the inscription “The Man Who Shattered Glass-Steagall.”
Libor and its euro counterpart, the Euribor, are benchmark rates determined by bank estimates of how much it would cost them to borrow from one another, in different timeframes and currencies. The banks submit sheets of numbers every weekday morning, London time. An adjusted average of the rates determines the size of payments on mortgages and corporate loans worldwide. The rates also serve as an indicator of the health of the banking system. Because some submissions aren’t based on real trades, the potential exists for manipulation.
So the submissions aren’t required to be based on actual trades eh? In other words the banks involved can just make it up! And they did.
A Barclays banker responsible for reporting borrowing rates was told to make the bank look healthier by not revealing that borrowing costs had risen. An e-mail he wrote to a supervisor confirms that he complied: “I will reluctantly, gradually and artificially get my libors in line with the rest of the contributors as requested,” he wrote. “I will be contributing rates which are nowhere near the clearing rates for unsecured cash and therefore will not be posting honest prices,” he continued, referring to rates in the overnight money market.
No, you probably don’t.
Libor and Euribor are benchmarks that are used as a base to set rates for damned near all lending in the economy in one form or another — directly or indirectly.
You, personally, got screwed. Everyone who borrowed money got screwed. You might have been screwed by a few pennies a day, but you still got screwed.
This sort of rigging was absolutely standard, it appears:
Here’s an e-mail about the three-month rate from a senior Barclays trader in New Yorkto the London banker who submitted the rates: “Hi Guys, We got a big position in 3m libor for the next 3 days. Can we please keep the lib or fixing at 5.39 for the next few days. It would really help. We do not want it to fix any higher than that. Tks a lot.”
Bankers submitting rates responded to such requests as if they were routine: “For you, anything,” and “done … for you big boy,” according to the e-mails. Not that the efforts went unappreciated: “Dude. I owe you big time!” one trader wrote to a Libor submitter. “Come over one day after work and I’m opening a bottle of Bollinger.”
Yeah. An outright scam and the guy who did it was rewarded too.
Heads should roll at other banks, too. Regulators and criminal prosecutors, including the U.S. Justice Department, are investigating at least a dozen other firms to determine whether they colluded to rig the rate. Among them: Citigroup Inc., Deutsche Bank AG, HSBC Holdings Plc and UBS AG.
Heads should roll all right. But until the Just-US Department along with other alleged regulators and “law enforcement”, which have proved to be nothing other than lapdogs for the banksters, ignoring outright criminal conduct as a matter of business and refusing to bring criminal charges against both people and institutions, change their stripes and start enforcing the law I will not be expecting anything other than “more of the same.”
The simple fact of the matter is that until we, the people, rise and demand that this crap stop and the people involved go to prison, and back up our demand with our willingness to act, this will not change.
Showing up at some protest and waving a sign may feel good, but if you go home at the end of the day and then vote for the same jackasses who are in office now, or one who doesn’t insist on and demand prosecution of this activity you’ve told the politicians that you have and will consent to this lawless behavior.
I will not vote for, support, endorse or otherwise give legitimacy to any politician who fails or refuses to demand and make as one of his first and foremost priorities the return of the Rule of Law and criminal prosecution for this, and all other myriad economic frauds.
Those who argue that I should do so, irrespective of why, have in the past and will continue to get my middle finger in response — both publicly and privately.
Discussion (registration required to post)
No folks, it’s not just one bank.
If you transacted in any loan that was tied to this rate at any time in the last several years, you probably got rooked, whether it was for pennies or thousands.
According to the WSJ:
Other banks that have disclosed they are under investigation include Citigroup Inc., C-2.77% HSBC Holdings HBC -3.88% PLC, J.P. Morgan Chase JPM -3.45% & Co., Lloyds Banking Group LLOY.LN -5.79% PLC and Royal Bank of Scotland Group PLC. None of these banks have been charged with any wrongdoing in the matter by U.S. or U.K. regulators.
Isn’t that special? Why yes, it is.
Now if we could just see something approaching accountability.
But we won’t, you know, just as we didn’t when JP Morgan was involved in the disastrous Jefferson County Alabama scheme that landed several local folks in Alabama in prison on various corrupted-related charges.
The people — who got screwed blind and sideways with permanently-larger sewer bills as a result of the corruption, got nothing back from the banksters – they are still paying for the screwing they had inflicted on them.
I’m not one for vigilante justice, but one does have to wonder — at what point do the people simply stop putting up with this crap?
Abacus Federal Savings Bank, a small bank with a major presence in New York City’s Chinese community, and 19 of its former employees have been charged with inflating the qualifications of mortgage applicants to meet federal loan standards, a scheme that prosecutors say brought the bank tens of millions of dollars in ill-gotten fees and sent hundreds of millions of dollars in risky mortgages to the investment market.
The indictment against the bank and its employees describes the sort of scheme that led to the financial crisis of 2008, when the risk of mortgages to borrowers was disguised and passed on to investors. As those mortgages went bad, banks considered too big to fail were brought to their knees and bailed out by taxpayers.
Where have I heard that before? Oh yeah, it was here, under oath….
These mortgages were sold to Fannie Mae, Freddie Mac and other investors. Although we did not underwrite these mortgages, Citi did rep and warrant to the investors that the mortgages were underwritten to Citi credit guidelines.
In mid-2006 I discovered that over 60% of these mortgages purchased and sold were defective. Because Citi had given reps and warrants to the investors that the mortgages were not defective, the investors could force Citi to repurchase many billions of dollars of these defective assets. This situation represented a large potential risk to the shareholders of Citigroup.
Testimony of Richard M. Bowen, III page 2
I started issuing warnings in June of 2006 and attempted to get management to address these critical risk issues. These warnings continued through 2007 and went to all levels of the Consumer Lending Group.
We continued to purchase and sell to investors even larger volumes of mortgages through 2007. And defective mortgages increased during 2007 to over 80% of production.
So once again, why are we seeing the small fish who put up a few bad mortgages arrested while those big fish who admitted to stuffing the channel with 80% of their production with knowingly-defective product have not seen the same thing happen to them?
Remember folks, nobody committed any crimes.
They still write fluff pieces in the WSJ trying to convince you that an admission of criminal conduct isn’t actually an admission and thus couldn’t be prosecuted….
A former top U.S. official in charge of investigating the financial crisis said the government has concluded that many inquiries of wrongdoing by financial executives can’t succeed as criminal prosecutions.
“There’s been a realization and a more deliberate targeting by the Department of Justice before we launch criminally on some of these cases” said David Cardona, who was a deputy assistant director at the Federal Bureau of Investigation until he left last month for a job at the Securities and Exchange Commission. The Justice Department has decided it is “better left to regulators” to take civil-enforcement action on those cases, he said.
Uh huh. Let’s remember that Citi’s former chief risk officer testified under oath before the FCIC, presenting written documentation, that the firm — all the way into the executive suite — was fully aware that 80% of the loans it was writing and selling on in 2007 did not meet quality standards.
Yet they sold them anyway without disclosing this fact to the buyers.
Were this a food quality case where 80% of the meat sold by a slaughterhouse was known to contain contaminants and led to the death and/or sickness of thousands of people, or a steel quality case where 80% of the steel was known to contain imperfections that led to the collapse of a building and the death of thousands, the executives in question would be sitting in the graybar motel and the firm involved would be out of business.
This is not a singular example. Wachovia, for example, entered a deferred prosecution agreement — a guilty plea, in effect — for money laundering to the tune of hundreds of millions of dollars of funds laundered for Mexican Drug gangs. Then there’s the Jefferson County Alabama case in which municipal officials and related parties were actually convicted and went to prison and yet nobody from any of the financial firms involved was criminally prosecuted, nor were the firms themselves.
The latter is especially galling since in order to receive a bribe (the base allegation of corruption that was proved to a criminal standard and led to imprisonment) someone else must offer said bribe and the victims of this scheme were the entirety of the citizens of the county who are stilling paying for the corrupt practices involved and have received no restitution nor do they have any hope of it in the future.
While the apologists say that these cases are “hard to prove” this assertion does not pass the smell test — in many of these cases that I have bird-dogged for years now we have sworn testimony as evidence, in others (e.g. the cases outlined in the 60 Minutes piece that I covered the other day) there are actual whistleblowers who have and will testify and in still others there are actual prosecutions of people on the “other side” of the transactions in question that have led to convictions — that is, cases where the required standard of proof has been met!
You are free to come to whatever conclusion you’d like as to the reason for the lack of prosecution of financial firms and the executives running them, but the “mainstream media” apologist game does not stand up to even the most-cursory level of inquiry.
NEW YORK — A federal judge Wednesday challenged the SEC’s plan to settle a fraud case against Citigroup for $285 million, saying that the deal would recoup only a fraction of investors’ losses and would leave the firm free to proclaim its innocence in private lawsuits over the remaining damages.
The judge used the Citigroup case to mock the SEC’s traditional way of doing business — allowing defendants to settle without admitting or denying wrongdoing.
The unproven allegations, U.S. District Court Judge Jed S. Rakoff said, “are no better than rumor or gossip.”
“Does not the SEC of all agencies have an interest in establishing what the truth is?” Rakoff asked.
Well yes, it should. But it doesn’t. And here’s the real problem: This isn’t the first offense.
In fact Citi has already promised not to do it again many years ago. And yet they did it again. This is not unique; let’s remember NY Fed board member Kindler
New York-based Pfizer agreed to pay $430 million in criminal fines and civil penalties, and the company’s lawyers assured Loucks and three other prosecutors that Pfizer and its units would stop promoting drugs for unauthorized purposes.
What Loucks, who’s now acting U.S. attorney in Boston, didn’t know until years later was that Pfizer managers were breaking that pledge not to practice so-called off-label marketing even before the ink was dry on their plea.
On the morning of Sept. 2, 2009, another Pfizer unit, Pharmacia & Upjohn, agreed to plead guilty to the same crime. This time, Pfizer executives had been instructing more than 100 salespeople to promote Bextra, a drug approved only for the relief of arthritis and menstrual discomfort, for treatment of acute pains of all kinds.
Yeah. This disgusting practice is spread all over our financial system along with virtually all other areas of “rich and powerful” firms and individuals.
Claims that this is an “isolated incident” are blatant lies; among financial firms alone out of 19 firms you can count 51 offenses:
The problem with such “fines” is that the record demonstrates that they provide no deterrent at all. As I have repeatedly pointed out if the penalty for robbing a bank was that you had to give back 1/3rd of the loot — and that’s all — the bank would be robbed literally every hour on the hour.
The political folks who utterly refuse to address this issue – including the so-called “Tea Party” (Joe Walsh anyone? Or how about Steve Southerland?) are simply pointing out that you are considered peasants and under the boot of an imperious King who grants those in his favor the right to screw you with impunity.
If you continue to support and vote for these jackals on either side of the aisle — if you continue to provide consent of the governed to the government under those terms — then you’re consenting to being screwed.
It’s that simple folks
You want to know why “OWS” is right? It’s found right here in this sort of so-called “justice” that the SEC is trying to mete out. And don’t start this crap about it only being “Democrats” that do this sort of thing: The Republican Party controls The House which means it also controls appropriation of funds and could literally close any department or agency that refused to bring actual prosecutions and demand actual jail sentences.
The so-called “Rule of Law” party likes to run pretty commercials, and in fact Herman Cain’s campaign just called me seeking money a few minutes ago.
I told them that I’d give them a donation when hell freezes over, as not only does Judge Rakoff discern that this sort of “settlement” is a sham but so do I, and I’m not funding any more of that crap.
The “nice girl” on the other end of the phone hung up on me. Well f$#c you very little Herman, along with the rest of the Republican field.
The Tea Party had every opportunity to stand on exactly this principle and demand handcuffs and real solutions, and in fact Santelli’s Scream was founded on this very principle, as has been my advocacy since I started this publication. But that foundation — The Rule of Law and equality under the law — was almost-immediately co-opted by pretty-face Palin and others who immediately turned the focus to things that had nothing to do with how our economy got to be where it is.
If the “Tea Party” wishes to avoid being buried by history then it needs to get in front of this issue now and join with the only group of people who are currently out in the street protesting this exact crime. They need to refuse to go home until the jackals that caused this economic mess are in the dock for their offenses. This singular focus and the dismantling of the fraudulent edifices that permeate our financial system can be accomplished; what’s more important is that doing so now is infinitely preferable to continuing the Ponzi and winding up with even more damage to be absorbed. There’s an opportunity here but the time remaining to take advantage of it is fleeting and soon will be gone if not seized.
That existing group, incidentally, is called Occupy Wall Street.