FOR IMMEDIATE RELEASE
Contact: Alex Formuzis
DOJ also fails to disclose massive CDO ‘immunity-gift’
Washington, D.C., July 14, 2014– Better Markets President and CEO Dennis Kelleher issued the following statement today in response to the announced settlement between the U.S. Department of Justice and Citigroup over the bank’s billions of dollars in fraudulent mortgage securities it sold unwitting customers ahead of the financial collapse of 2008.
“The settlement announced today shows again that the Department of Justice (DOJ) is not serious about punishing Wall Street or holding it accountable for its crimes in causing the worst financial crash since 1929 and the worst economy since the Great Depression of the 1930s. DOJ brags about and wants everyone to focus on the $7 billion settlement dollar amount, but that amount is meaningless without disclosure of the key information about how many hundreds of billions of dollars Citigroup made, how many tens of billions investors lost, how many billions in bonuses were pocketed, which executives were involved and what positions they now have with the bank.
“DOJ’s thick packet of self-serving public relations spin cannot hide the fact that it has again failed to disclose any meaningful information about Wall Street’s massive, systemic, illegal fraudulent conduct. This not only prevents the public from knowing if Citigroup was held accountable for its crimes, but, very importantly, it also prevents anyone from scrutinizing DOJ’s backroom deal making with Wall Street’s biggest banks.
“This settlement is also worse than the deal DOJ cut with JP Morgan Chase and the conduct settled here is worse than Goldman’s Abacus deal (settled by the SEC). The DOJ deal here gives Citigroup immunity not only for its fraudulent RMBS subprime mortgage business, but also for its massive ‘designed-to-fail’ CDO derivatives business, which alone generated tens if not hundreds of billions of dollars in profits. In fact, Citigroup was the largest worldwide placement agent for CDOs in 2007. But, DOJ apparently threw that immunity in for Citigroup at the last minute, literally within the last few weeks, without any investigation, and for little if any payment. That presumably is why DOJ failed to mention this massive immunity-gift in its press release.
“Citigroup, the Wall Street bank that received the largest amount of Federal bailouts to prevent its bankruptcy in 2008 (almost $500 billion), was a conveyor belt for toxic securities throughout the world and is now being handed another big bailout by the government: a sweetheart immunity deal and ongoing concealment of how its executives, officers and staff defrauded the American people and almost caused a second Great Depression.
“DOJ continues to think it can fight crime on Wall Street with press releases and fool the American public with self-serving spin. But, as a recent poll conducted for Better Markets proves, the American people are not so easily fooled: 89% of the public rates the federal government’s efforts to hold Wall Street accountable as ‘only fair’ or ‘poor.’ DOJ’s actions in this settlement with Citigroup confirm the wisdom of the American people.
“Today’s actions again confirm the indefensible double standard of justice DOJ established of treating Wall Street’s biggest, richest, most politically connected banks more favorably than anyone else. History is going to judge DOJ harshly for not only letting Wall Street off, but for letting the American people down.”
Better Markets is an independent, nonprofit, nonpartisan organization that promotes the public interest in financial reform in the domestic and global capital and commodity markets. Better Markets advocates for transparency, oversight and accountability with the goal of a stronger, safer financial system that is less prone to crisis and failure thereby eliminating or minimizing the need for more taxpayer funded bailouts. To learn more, visit www.bettermarkets.com.