Citigroup to pay 285mil to settle Mortgage-Bond scheme

D.E.P. · Oct 19, 2011

285 mil? REALLY? That, to these banks, could be compared to letting grandma spank a man who just went on a 15 person killing spree and then saying "I hope you learned from this!" and then letting him go. Get (*)(*)(*)(*)ing real! This is some of the dirtiest, most corrupt (*)(*)(*)(*) and we let them off the hook with pocket change to these banks? If anyone has to wonder why everyone wants change...look no further. This is absolute bull(*)(*)(*)(*).

Citigroup to Pay $285 Million to Settle Mortgage-Bond Case

By STEVEN GOLDSTEIN

Citigroup Inc. agreed to pay a $285 million fine to settle civil charges brought by the Securities and Exchange Commission that it sold securities backed by mortgages that it simultaneously bet against.

The regulator alleged that Citigroup Global Markets structured and marketed a $500 million collateralized-debt obligation that was backed by subprime loans, and then bet against those mortgage-related assets, which it didn't disclose to investors.

According to the agency, one trader in an email called the portfolio "possibly the best short ever."

The CDO in question defaulted within months, leaving investors with losses while Citigroup made $160 million in fees and trading profits, according to the SEC. The fine will be used to reimburse investors.

The SEC also civilly charged Brian Stoker, the Citigroup employee primarily responsible for structuring the CDO transaction. Mr. Stoker didn't agree to a settlement.

"The securities laws demand that investors receive more care and candor than Citigroup provided to these CDO investors," said Robert Khuzami, director of the SEC's division of enforcement. "Investors were not informed that Citgroup had decided to bet against them and had helped choose the assets that would determine who won or lost."

A call to Citigroup wasn't immediately returned.

A lawyer for Mr. Stoker, Fraser Hunter of WilmerHale, said in a statement: "While Citi has today resolved the SEC's allegations that Citi should have disclosed its trading position and role in the asset selection process for the Class V CDO, there is no basis for the SEC to blame Brian Stoker for these alleged disclosure violations. He was not responsible for any alleged wrongdoing—he did not control or trade the position, did not prepare the disclosures and did not select the assets. We will vigorously defend this lawsuit."

Credit Suisse Group AG, the collateral manager, was fined $2.5 million because it allowed Citi to influence the portfolio and also was responsible for disclosure. Samir H. Bhatt, the portfolio manager at Credit Suisse mostly responsible, agreed to a six-month suspension as an investment adviser and a $50,000 fine.

A Credit Suisse spokesman declined to comment.

Credit Suisse isn't being targeted by the SEC for any other CDO case, a person familiar with the bank said.

A lawyer for Mr. Bhatt declined to comment.

The fine is the agency's third largest since the financial crisis, trailing only the $500 million Goldman Sachs Group Inc. paid to settle civil charges relating to a case of structuring a housing-backed investment gone bad, and the $300 million State Street Corp. paid over allegations that it misled investors over a money-market fund that was invested in subprime loans.

http://online.wsj.com/article/SB100....html?mod=googlenews_wsj#articleTabs_comments
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How long are we going to let banks and our government to lay in the same bed and hand out taps on the wrist for doing things like this?

botenth · Oct 19, 2011

Don't put non-violent criminals in jail.

HIT THEM WHERE THEY COUNT !

waltky · Jan 28, 2012

New Obama mortgage bailout...

Obama Proposes New Mortgage Bailout: Tax Banks to Help 'Responsible' Homeowners
January 26, 2012 President Obama during his State of the Union speech Tuesday debuted a new plan aimed at fixing one part of the housing crisis, saying that he would soon send Congress a bill to help some people refinance their mortgages.

Obama said he was sending lawmakers a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low interest rates. No more red tape. No more runaround from the banks. The president proposed to pay for his plan by taxing banks. A small fee on the largest financial institutions will ensure that it wont add to the deficit, and will give banks that were rescued by taxpayers a chance to repay a deficit of trust. Obama went on to say that there would be no bailouts, no handouts, and no copouts, going forward for the financial industry. However, his mortgage plan would essentially be a bailout for the struggling homeowners it purports to help.

Typically, refinancing is not much of a problem, provided homeowners are current on their payments and have decent credit. However, it is nearly impossible for homeowners whose mortgage is worth more than the home its based on. This is because there is no financial benefit for banks to give one of these so-called underwater homeowners a new loan, as it would basically amount to forgiving part of the previous debt. Since the homeowner must borrow against the house which has dropped in value a bank would essentially be giving away the difference between the old mortgages value and the new mortgages value.

A government program allowing underwater homeowners to refinance their loans would constitute a bailout, essentially forgiving large amounts of debt they currently owe. Currently, interest rates on 30-year fixed mortgages are approximately four percent a historically low number. Allowing an underwater homeowner to get a new loan with a lower interest rate would result in much lower repayments. Unnamed White House officials have been quoted as saying the plan would allow underwater homeowners to refinance and obtain new loans guaranteed by the Federal Housing Administration (FHA). Currently the FHA is prohibited from new loans to underwater homeowners because they have no financial incentive to repay the loans due to the reduced equity in the home: Because their homes are worth far less than their mortgage, borrowers face a financial incentive to default on their loans, to escape paying far more than the home is worth.

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fiddlerdave · Jan 29, 2012

There goes the petty cash fund!

waltky · Dec 2, 2012

Granny says is about time Wall St. started payin' fer dey's shenanigans an' sufferin' like the other 99%...

Citi to slash bonuses, cut 150 Wall Street jobs
November 29, 2012 - Citigroup plans to shrink bonuses and cut 150 jobs from its investment banking and trading units.

Citigroup Inc.s trading and investment-banking unit plans to eliminate 150 more jobs while shrinking bonuses by as much as 10 percent, extending the toll of Wall Streets revenue slump, two people with direct knowledge of the decisions said. The dismissals, which will occur this quarter at the New York-based firm, will affect businesses including equities trading and underwriting, said one of the people, who requested anonymity because the plans havent been announced. While bonuses for this year will shrink across the securities and banking division, which employs about 17,000 people, top performers are likely to be spared reductions, the people said.

Chief Executive Officer Michael Corbat, 52, who took charge of Citigroup last month, joins Wall Street leaders in facing an industrywide slump in trading and investment-banking revenue, stiffer capital requirements and Europes debt crisis. Goldman Sachs Group Inc., Morgan Stanley and UBS AG are among rivals focused on reducing costs. The latest job cuts at Citigroup, the third-largest U.S. bank, were already in the works under Corbats predecessor, Vikram Pandit, one person said. We have been making targeted headcount reductions throughout the year in certain businesses and functions across Citi as part of our efforts to control expenses during the current environment, Danielle Romero-Apsilos, a spokeswoman for Citigroup, said in an e-mailed statement.

Reducing Staff

Firms across Wall Street are firing employees and disposing of assets as they deal with new rules aimed at strengthening capital, cutting risks and preventing another financial crisis. UBS, whose home country of Switzerland has imposed some of the most stringent capital requirements, said last month its largely exiting fixed-income trading. Investment banks cost-cutting needs to be severe to deal with the impact of the rules, Sanford C. Bernstein analysts said this month. Firms must slash pay and headcount and get rid of almost a third of their trading-business assets to earn even half the returns they once made, while replacing some traders with computers, the analysts wrote. Citigroups planned job cuts add to 1,200 dismissals that the lender announced for the securities and banking division in January, which included firings of technology and operations employees. By July, Citigroup decided to eliminate 350 more jobs, a person with knowledge of the matter said at the time.

Bonuses Cut
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Citigroup to pay 285mil to settle Mortgage-Bond scheme

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Citigroup to pay 285mil to settle Mortgage-Bond scheme

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