Same old story. The crimes of the financial crisis remain, for the most part, unpunished-except if you are a shareholder of a financial institution who is paying the price for the misdeeds and crimes of the greedy, overpaid executives who destroyed the lives of millions of people. Today’s example: Citibank.
Citigroup said on Wednesday that it had agreed to pay $590 million to settle a class action lawsuit brought by shareholders who contended that they had been misled about the bank’s exposure to subprime mortgage debt on the eve of the financial crisis.The shareholder lawsuit, originally filed in November 2007, alleged that former officers and directors of Citigroup had “concealed the company’s failure to write down impaired securities containing subprime debt” at a time when the collapse in the mortgage market made it apparent that banks including Citi would be adversely impacted. In late 2007, Citigroup wrote down billions of dollars on collateralized debt obligations tied to subprime debt, and reported a fourth-quarter loss of $9.83 billion that year.
Of course, there is no admission of guilt.To be clear, this resolved a civil action, not a criminal action brought by the government. Citibank already paid off the government even though, a year ago, Judge Jed S. Rakoff of the Federal District Court in Manhattan made it clear that he thought the Securities and Exchange Commission was giving Citibank a gift: “I won’t be cute and ask what percentage of Citigroup’s net worth is $95 million because I do not have a microscope with me,” he said.
This is part of a pattern:
The government goesafter the little fish.
The SEC lets off J.P. Morgan with a wrist slap fine.
As for Citibank, it will gleefully accept a miniscule pay out and let its former and current executives skate–particularly Robert Rubin who I have argued may have committed perjurybut certainly was at the center of Citibank’s role in the massive financial collapse.
Until we reach a point in the country where large numbers of high executives lose their freedom and sit in jail for extended periods of time, the financial robbery of the people will continue.