” The memo landed on a Sunday in November. It was 2007, and securities backed by subprime mortgages were roiling markets and imperiling banks. Merrill Lynch Chief Executive Officer Stan O’Neal had just resigned under pressure, and Citigroup CEO Chuck Prince was rumored to be on his way out.
So the Nov. 4 memo to employees in Citigroup’s markets division seems bold in hindsight. While other banks were looking to unload the toxic securities and Citigroup was taking an $11 billion writedown on its holdings, then-trading chief Jamie Forese and fixed-income head Paco Ybarra had other plans. They announced they’d turn the bank’s souring mortgage debt over to a new team and chart a course for the future. It was, they said, a “great opportunity.”
“No one really has any idea of the risks these banks are taking and therefore the threat they pose to the financial system at any point in time,” says Dennis Kelleher, president of Better Markets, a nonprofit that advocates for tougher financial regulations.
To read the full Bloomberg Markets article by Dakin Campbell and Donal Griffin click here.