Citigroup settles civil fraud complaint over derivatives scheme

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» 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.

Posted by Chris Tognotti • 0 Comments • Permalink

30 Sep 2010 21:53

There are big, big holes in that Wall Street financial reform act — holes big enough for Wall Street traders to drive their Ferraris through. … I think we’re going to be left with a Wall Street that continues to grow more and more powerful and richer relative to the rest of the United States economy.
Economist (and Bill Clinton’s Secretary of Labor) Robert Reich • Regarding the economic recovery and financial reform, which he says has not succeeded in helping the middle-class, but has succeeded in allowing the financial industry to get richer. It’s created a disparity that, according to Reich, hasn’t existed since the Great Depression. “[The middle class] can’t go deeper and deeper into debt. They can’t work longer hours. They’ve exhausted all of their coping mechanisms,” he says. source

Posted by Ernie Smith • 0 Comments • Permalink

Quite frankly, common sense prevailed. … Our objectives were to get the risky stuff out of banks. We figured out how to do that.
Sen. Blanche Lincoln • On her derivatives proposal, the meat of which was kept in a last-minute deal brokered waaaaaaaaaaaaay past bedtime. Obviously, most of this stuff will fly over non-investors’ heads, but the deal essentially allows banks to keep using derivatives on less-risky investments – foreign exchange, interest rate, gold and silver swaps, and hedges on their own investments – while forcing them to spin off separate companies for their riskiest derivatives. You know, the ones that caused the financial crisis, like cleared and uncleared commodities, agricultural, energy and equities swaps, and credit. Some biz-friendly Democrats wanted to railroad this, but failed. Nice save. source

Posted by Ernie Smith • 0 Comments • Permalink

DERIVATIVES! DERIVATIVES! DERIVATIVES! DERIVATIVES! We’re so pumped to see financial reform finally pass between the House and Senate that “DERIVATIVES!” is kinda like a battle cry for us. Or not. But Christopher Dodd gets his name on the broadest rewrite of financial law since the 1930s, and the deal-brokering has if nothing else, made the bill palatable to some on both sides of the aisle. Congress has given themselves a deadline of today, so some stuff may end up on the cutting-room floor, but it would still be a big victory. Right? Right? DERIVATIVES! source

Posted by Ernie Smith • 0 Comments • Permalink

We are united in our opposition to the partisan legislation reported by the Senate Banking Committee. As currently constructed, this bill allows for endless taxpayer bailouts of Wall Street and establishes new and unlimited regulatory powers that will stifle small businesses and community banks.
A letter from all GOP Republicans to Harry Reid • Making it clear that the party will again be the Party of No when it comes to financial reform. Because, hey, it worked out for them last time. Obama, by the way, says he won’t pass a bill that doesn’t do something to hold back the onslaught of derivatives. Blanche Lincoln is working on adding teeth to the bill. source

Posted by Ernie Smith • 1 Comment • Permalink