If you were wondering why the new House bill on bank bailouts seemed like it was written by Citigroup, it’s because it was literally written by Citigroup.
“Citigroup’s recommendations were reflected in more than 70 lines of the House committee’s 85-line bill.”
» Citigroup CEO Vikram S. Pandit’s upcoming compensation package, along with the compensation packages of other executives, was voted down by a majority of shareholders during an investors meeting in Dallas. While the vote was nonbinding, meaning the bank doesn’t actually have to act according to the shareholders’ wishes, the bank says it will not ignore its investors. “Citi’s board of directors takes the shareholder vote seriously,” said spokesman Jon Diat, adding, ” [We’ll] consult with representative shareholders to understand their concerns.”
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» How they worked: These banks took advantage of a set of emergency loans from the Federal Reserve distributed between August 2007 and April 2010. Bloomberg Markets magazine did the math on the numbers and figured out that, by looking at the companies’ net interest margin, you could see how the companies took advantage of the below-market rates they got on the loans to earn a profit. The companies that scored the biggest paydays? Citigroup, which earned $1.8 billion, and Bank of America, which earned $1.5 billion.
» A tidy little sum: It’s being reported that Citigroup has agreed to the above settlement, which would bring to an end a civil fraud complaint filed by some of their investors. The story is, as it happens, quite similar to what Goldman Sachs was found to have done (Goldman shelled out $550 million in that case). Citigroup helped structure investment portfolios for their clients without telling them that the bank itself was selecting the assets while betting against their success. In simple terms, a conflict of interest, and one that netted the company nearly $1 billion dollars. That figure, also, says something about the problem of mega-corporations buying out of legal trouble; namely, the amount it costs to satisfy a plaintiff is nearly never enough to such a company to truly dissuade the behavior.
Gary Foster, 35, pleaded guilty to bank fraud, admitting that he took the money between 2003 and 2010. He appeared in U.S. district court in Brooklyn before Judge Eric Vitaliano.
Assistant U.S. Attorney Michael Yaeger said the government will request a prison sentence of eight to 10 years. Foster will remain free on $800,000 bail until he is sentenced.
Lovely — way to play into stereotypes about banking execs there, Gary.
» So what was affected? The company says that the hack involved names, bank card numbers and contact information such as e-mail addresses. Not affected were cardholders’ social security numbers, card expiration dates or CVV numbers. All this is of course is awesome to wait a month to tell everyone!
The current environment of heightened regulatory scrutiny has the potential to subject the corporation to inquiries or investigations that could significantly adversely affect its reputation.A statement from Bank of America • Noting in a filing with the Securities and Exchange Commission that the company could be subject to huge penalties over their abusive mortgage practices. They’re not alone; Wells Fargo and Citigroup ware in the same boat, and it’s all thanks to the shady way that the trio dealt with their foreclosures. The reports from the companies suggest that all three will take a financial hit for said shadiness. Bank of America says that the state and federal inquiries “could result in material fines, penalties, equitable remedies (including requiring default servicing or other process changes), or other enforcement actions, and result in significant legal costs.” In other words, they’re screwed for screwing over homeowners. Oops. source (via • follow)
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