From Robert Reich Facebook post
July 14, 2014
Post by Robert Reich.
The Justice Department will announce today a $7 billion settlement with Citigroup for its role in duping investors into buying defective fraudulent mortgage-backed securities that contributed to the near meltdown of Wall Street six years ago. This will be played in the media as a big victory for the Justice Department but it’s actually the opposite because: (1) $7 billion ($4.5 billion in cash and $2.5 billion in various nice things like financing affordable housing and modifying some homeowner’s loans) is a pittance compared to the money Citi rakes in. In just the second quarter of 2014 its revenues were $20.5 billion. Its stock price is already up this morning. (2) Citi doesn’t admit any wrongdoing, so the settlement doesn’t clear the way for other plaintiffs injured by Citi’s fraud. (3) The Justice Department will forgo any potential cases against Citigroup over collateralized debt obligations (complex deals the bank sold in the years before the crisis), where Citi’s fraud caused major losses. And (4) not a single Citi executive will go to jail. So why the giveaway to Citi? Is it because (a) Citi spent $3.7 billion on the best corporate defense lawyers money can buy, while Justice has a small and relatively inexperienced team? (b) Citi’s current and former executives include people who served at the highest levels of the Clinton, Bush, and Obama administration? (c) Citi is a major contributor to both the Republican and Democratic parties, and to their former and upcoming presidential candidates? (d) Other?
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