BU Now » Citigroup

Citigroup pays to settle subprime claims

Dick Taffe — Thu, 29 Jul 2010 20:37:41 +0000

Without admitting guilt, Citigroup will pay $75 million to settle federal civil claims that it failed to disclose vast holdings of subprime mortgage investments that crippled the bank during the financial crisis. Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law and a former counsel to the Federal Reserve Board of Governors, says it’s pretty thin gruel for the government to take back $75 million from a bank in which it alaready owns a controlling interest since bailing it out.

“More meaningful from a policy perspective would be the clawing back of the obscene sums paid to the likes of Robert Rubin for his negligent oversight of the institution.”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu

BofA, Citi hid debt like Lehman

Dick Taffe — Thu, 27 May 2010 17:41:23 +0000

Bank of America and Citigroup brushed off reports that they incorrectly hid from investors billions in debt — similar to what Lehman Brothers did — to obscure its true level of risk. Company documents filed with regulators show the two Wall Street banks classified some short-term repurchase agreements (“repos”) as sales, which they should have shows as borrowings. Law Professor Elizabeth Nowicki, a former SEC and Wall Street attorney, says such “repo” transactions should have been disclosed — even if they were legal.

“Isn’t it material to one poker player to know that all the other poker players at the table regularly cheat in other games, even if none of the players actually cheats in the game then being played? Bank of America, Citi, and other banks using repos can count on being sued promptly by investors.”

Contact Elizabeth Nowicki, 518-867-5355, enowicki@bu.edu

Citigroup CEO says things ‘different’

Dick Taffe — Thu, 04 Mar 2010 19:40:01 +0000

Citigroup CEO Vikram Pandit told a Congressional panel that the bank is “fundamentally different” since it took $45 billion in taxpayer bailout money last year. But Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law, says Congress should be asking why taxpayers were’t given more effective oversight of Citigroup after the bailout.

“Rather than grilling Mr. Pandit on how he runs Citigroup, the Congressional TARP panel should be asking Treasury officials, past and present, why the U.S. did not demand representation on the Citigroup board of directors. As long as the taxpayers are the largest shareholders of the company, this is the most effective way to provide oversight in the public interest.”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu

Citigroup repayment costs taxpayers

Dick Taffe — Wed, 16 Dec 2009 20:54:54 +0000

On the one hand Citigroup is repaying Uncle Sam that TARP bailout money, which is good for taxpayers. On the other hand, they’re getting a multi-billion dollar tax break in the process. Economics Professor Laurence Kotlikoff, a former senior economist in the White House Council of Economic Advisors, doesn’t like the tax breaks built into the repayment program.

“This is Uncle Sam handing out money under the rug. This is expected of a third-world dictatorship, not our country.”

Contact Laurence Kotlikoff, 617-353-4002, or kotlikoff@bu.edu

Bailed-out Citi raising salaries

Dick Taffe — Wed, 24 Jun 2009 13:46:59 +0000

Coping with a government bailout/buy-in and a share price down 84 percent from last year, Citigroup reportedly intends to raise base salaries as much as 50 percent to offset smaller annual bonuses. School of Management Professor Fred Foulkes, director of the Human Resources Policy Institute, can discuss how this might go over with the Obama administration’s new “pay czar.”

Contact Fred Foulkes, 617-353-4281, ffoulkes@bu.edu

FDIC pushing shake-up at Citi

Dick Taffe — Fri, 05 Jun 2009 14:31:23 +0000

The FDIC is reportedly urging a major shift in Citigroup’s executive lineup, including moving CEO Pandit to get more commercial-banking experience at the top of the bailed-out former investment firm. Citi’s other regulators (the Fed and OCC) may not agree. School of Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law, can offer context to the regulatory dilemma.

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu

GM, Citi off Dow Jones Industrials

Dick Taffe — Mon, 01 Jun 2009 14:11:03 +0000

General Motors and Citigroup both are being taken off the Dow Jones Industrials Average listings, to be replaced by Travelers Insurance and Cisco Systems. School of Management finance Professor Scott Stewart, a former long-time Fidelity funds manager, can discuss what the shifts in the Dow Jones composition means to investors.

Contact Scott Stewart, 617-353-2353, sstewart@bu.edu

Wall Street compensation battles

Dick Taffe — Wed, 27 May 2009 14:29:03 +0000

With public heat on bonuses at bailed-out Wall Street banks, Citigroup and Bank of American reportedly may be joining Morgan Stanley in raising base salaries to make up for annual bonus limitations. School of Management Professor Fred Foulkes, director of the Human Resources Policy Institute, can comment on the trend.

Contact Fred Foulkes, 617-353-4281, ffoulkes@bu.edu

Citigroup bailout needs oversight

Dick Taffe — Sun, 30 Nov 2008 20:58:01 +0000

School of Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial law and a former counsel to the Federal Reserve Board of Governors, says the government’s bailout of Citigroup needs more oversight than initially planned.

“Once again, the Treasury has opened its coffers to bail out a private institution without requiring any accountability or oversight.

“If we have learned anything from the current financial crisis it is that the ‘originate to sell’ business model was flawed as it was irresponsible. Citigroup has been a key player in implementing this model and leadership at the ighest board and executive level should be held to account for grossly inadequate risk controls and the firm’s overreaching for yields and fees.

“The U.S. should demand, as part of its investment in Citigroup, that one or more directors be appointed to the Citigroup board to ensure that the shareholders’ and the taxpayers’ interests are properly represented.”