The US government is bought

Discussion in 'Wall St. News' started by nitro, Dec 29, 2011.

  1. nitro


    (Reuters) - The U.S. Securities and Exchange Commission got a fresh dressing-down from the judge who rejected its $285 million settlement with Citigroup Inc, as he said the regulator kept him out of the loop on its efforts to salvage the case.

    In his latest sharply-worded order, U.S. District Judge Jed Rakoff chastised the SEC for not telling him it had filed an emergency request with an appeals court to put the case on hold, after making the same request to him.

    So when Rakoff on Tuesday issued a ruling opposing any delay in the case, he was beaten to the punch; 78 seconds earlier, the 2nd U.S. Circuit Court of Appeals had granted the SEC the temporary halt it sought.

    He also accused the SEC and Citigroup of potentially "misleading" the court, saying they called him around 3:30 p.m. EST (2030 GMT) on Tuesday to discuss the case, without mentioning the filing with the 2nd Circuit.

    Less than an hour later, the 2nd Circuit ruled, and so did Rakoff. That 2nd Circuit order negated the work Rakoff said he had done over the weekend to get a ruling to the SEC as quickly as he could.

    Rakoff wrote that he "spent the intervening Christmas holiday considering the parties' positions and drafting an opinion, so that (the court) could file it on December 27, i.e. the first business day after the Christmas holiday."

    To prevent a recurrence, Rakoff ordered the SEC and Citigroup to "promptly notify" him of any filings they make in the appeals court.

    An SEC spokeswoman had no immediate comment. A Citigroup spokeswoman declined to comment.

    The $285 million settlement was intended to resolve charges that Citigroup sold risky mortgage-linked securities in 2007 without telling investors that it was betting against the debt, and causing more than $700 million of losses.

    In rejecting the accord in November, Rakoff said the SEC's failure to require Citigroup to admit or deny its charges left him no way to know whether the settlement was fair. Rakoff also called the payout "pocket change" for the third-largest U.S. bank.

    The 2nd Circuit case is SEC v Citigroup Global Markets Inc, 2nd U.S. Circuit Court of Appeals, No. 11-05227. The district court case is SEC v. Citigroup Global Markets Inc, U.S. District Court, Southern District of New York, No. 11-07387.

    (Reporting By Aruna Viswanatha and Jonathan Stempel; Editing by Tim Dobbyn)
  2. Unbelievable. Oh wait, it is believable. The SEC and the bankers are golfing buddies. They get adjoining suites at the hotel. They used to work for the other. Incest is rampant. Oh sure they'll viciously prosecute their best friends. Regulation is bad anyway isn't it?

    We have the best plutocracy money can buy.
  3. (snip)

    Page 5

    "Until 2008, Richard Bowen was a senior vice president and chief underwriter in the consumer lending division of Citigroup. He was responsible for evaluating the quality of thousands of mortgages that Citigroup was buying from Countrywide and other mortgage lenders, many of which were bundled into mortgage-backed securities and sold to investors around the world. Bowen's job was to make sure that these mortgages met Citigroup's own standards - no missing paperwork, no signs of fraud, no unqualified borrowers. But in 2006, he discovered that 60 percent of the mortgages he evaluated were defective.

    Kroft: Were you surprised at the 60 percent figure?

    Bowen: Yes. I was absolutely blown away. This-- this cannot be happening. But it was.

    Kroft: And you thought that it was important that the people above you in management knew this?

    Bowen: Yes. I did.

    Kroft: You told people.

    Bowen: I did everything I could, from the way-- in the way of e-mail, weekly reports, meetings, presentations, individual conversations, yes."

    To page 7

    "The next day Citigroup's CEO Charles Prince, in his last official act before stepping down, signed the Sarbanes Oxley certification endorsing a financial statement that later proved to be unrealistic and swore that the bank's internal controls over its financial reporting were effective.

    Bowen: I know that there were internal controls that were broken. I served notice in that e-mail that they were broken. And the certification indicates that they are not broken.

    Kroft: It would seem the chief financial officer and the people that signed the Sarbanes Oxley certification disregarded those warnings.

    Bowen: It would appear.

    We received a letter from Citigroup saying the bank had acted promptly to address Richard Bowen's concerns and that the issues he raised were limited to his division and had little bearing on the bank's overall financial health. Citigroup also told us that it did not retaliate against Bowen for sending the email. But not long after he sent it, Bowen's duties were radically changed.

    Bowen: I was relieved of most of my responsibility and I no longer was physically with the organization.

    Kroft: You were told not to come into the office?

    Bowen: Yes.

    [Phil Angelides: Mr. Bowen.

    Bowen: I am very grateful to the commission to be able to give my testimony today.]

    The Financial Crisis Inquiry Commission thought enough of Bowen's story to call him as one of its first witnesses and he turned over more than a thousand pages of documents to the Securities and Exchange Commission. Nothing ever came of it. But Bowen wasn't the only one to warn Citigroup's top officials about its financial weaknesses and breakdowns in the company's internal controls.

    Three months after Bowen's email Citigroup's new CEO Vikrim Pandit received a blistering letter from the office of the comptroller of the currency, its chief regulator. It questioned the valuations that Citi had placed on its mortgage securities and found internal controls deeply flawed. The letter stated, among other things, that risk management had insufficient authority and risk was insufficiently evaluated and that the Citibank board had no effective oversight.

    Yet eight days later, CEO Vikrim Pandit and Chief Financial Officer Gary Crittenden personally signed the Sarbanes Oxley certification. They attested to the bank's financial viability and the effectiveness of its internal controls. The deficiencies cited by the comptroller of the currency were never mentioned. Citi said it didn't consider the problems serious enough that they had to be disclosed to investors and says the certifications were entirely appropriate. But nine months later, Citigroup would need a $45 billion bailout and $300 billion more in federal guarantees just to stay in business. ";contentBody
  4. This is what make no sense to me. They say "extrinsic"market events to take away blame from them. But what is this "extrinsic" market events cause? Is caused from of them funding originators to find volume of loans, then to (ignore) their own people who tell them this loans are bad and high risk, then package this loans to sell all over the world to investors, now off their books and have no risk, then short this loans too.

    "CGMI further submits that any losses incurred by investors in Class V did not result from CGMI’s conduct, but rather from extrinsic market events—in particular, the devastating effects of the subprime and credit crisis, which swept away “good” collateral and“bad” collateral alike. “‘[W]hen the plaintiff’s loss coincides with a marketwide phenomenon causing comparable losses to other investors, the prospect that the plaintiff’s loss was caused by
    the fraud decreases,’ and a plaintiff’s claim fails when ‘it has not adequately ple[]d facts which,if proven, would show that its loss was caused by the alleged misstatements as opposed to intervening events.’
  5. Nitro, you understand what I am saying? If is "extrinsic" that is meaning the banks say this subprime originate outside of them. So why can they say this extrinsic when they fund originators, buy back this loans from originators, ignore the people telling them is really bad risky loans, then package and sell to investors, then short this loans?
  6. nitro



    Yep, you got it. As I mention in this thread

    you can get around the law and/or obfuscate your real intention by adding a layer of indirection. Here is another example

    Corporations use Ireland->Bermuda as an intermediary to avoid taxes.

    Adding an intermediary is done all the time to get around laws and rules and regulations. That is why the law is worthless if you can afford to set up structures to get around it. Remember Andy Fastow and Enron? This kind of deceit is par for the course now!!! it might even be taught at university accounting and business law classes!!!!

    The Occupy Wall Street protesters don't even know why the system fails them.
  8. Crispy


    No shit, welcome to reality. Always nice to see fresh faces here.

    The state always equals violence, in all ways.

    #10     Dec 31, 2011