Journalism in the Public Interest

Citigroup to Pay $1 for Every $500 in Subprime Exposure It Hid


The Citigroup building on July 17, 2009, in New York. (Spencer Platt/Getty Images)

Citigroup has agreed to pay the SEC $75 million to settle charges that the bank hid exposure to more than $40 billion in subprime CDOs. (That works out to roughly $1 fine for every $500 worth of hidden exposure.) Read the full SEC complaint.

In what the New York Times called “an unusual move,” the SEC also charged one current and one former Citi executive for making the misstatements. Former CFO Gary Crittenden will pay $100,000 and Arthur Tildesley—formerly the head of investor relations—will pay $80,000. Neither Citi nor the execs admitted to any wrongdoing. 

According to the SEC enforcement director Robert Khuzami, Citigroup had boasted in 2007 “of superior risk management skills in reducing its subprime exposure to approximately $13 billion,” when in fact, “billions more in CDO and other subprime exposure sat on its books undisclosed to investors.”

“We are pleased that we have reached agreement with the SEC to put this matter concerning certain 2007 disclosures behind us, and that the SEC is not charging Citi or any individual with intentional or reckless misconduct," said Citigroup spokeswoman Shannon Bell.

As we have noted in our bailout tracker, Citi's subprime losses have been massive, and resulted in multiple taxpayer-financed bailouts—$45 billion overall.

Citi execs have in the past said they were "deeply sorry" for ... not predicting the market collapse

We’ve reported on some of Citi’s specific CDO dealings with a hedge fund called Magnetar, and some of the disclosure questions about those deals as well as others. For more on trouble Citi and others could be facing, check out our bank investigations cheat sheet.

$75 million fine after $45 BILLION bail outs? God dammit American your financial regulatory system is a huge joke to the rest of the world - only it’s not that funny, because it’s responsible for much of the international financial turmoil and economic challenges we have experienced.

Thankfully where I’m from (New Zealand) our Aussie owned banks had the foresight to not be in a position of being exposed too deeply to the American banking system.

This is B.S. all the banks new about subprime. When your payment jump 3 times of the starting amount we all know it it impossible to pay for many of us on Main Street.
$1for every $500? it is a joke. And why the money goes to the SEC??????????
I would of done it differently. The fine would be…....
Everybody who received subprime would get a reduction in their mortgage to the current market value with a 2% interest from Citi.
75 million is not much, but could of helped a lot of people stay in their home to avoid foreclosure by Citi. To me it looks like Wall Street and its regulators
always come up with a plan to make more money.

Wasn’t the SEC who allowed these subprime mortgages and looked the other way? So I believe this money belongs to the people who have been victims of subprime preditory landing and not the SEC.
And by the way it was an INTENTIONAL RECLESS MISCONDUCT from Citi and all the other subprime lenders and banks. They all new the CDOs will default that is why Henry Paulson bet against them and made billions. While Goldman Sacks screwed its investors and got away with a slap on the wrist. Oh and the SEC got a settlemen from Goldman also right? Maybe it is time to regulate the regulators so middle class Americans don’t always get the short end of the stick.

The victims are the taxpayers and those who are suffering from the recession , the unemployed etc;
Those that got a mortgage knew the payments would increase over time, those that can’t read should have had someone that could at time of application. I don’t think there was a gun at anyone’s head. Maybe the mindset was ” get in the house now I’ll worry how to pay for it later “—-and yes Wall Street because of greed took down the country—a fine is not enough, how about taking their securities license away for a few years.

Allen Aaronson

July 30, 2010, 8:17 p.m.


i totally agree with Gabor! i have been trying to get a loan mod for 16 months now and keep getting the run around. i honestly do not know how their employees can continue to go to work each day without protest. i would have started a blog about the place 2 years ago called wikiCITI!!! i bought my place 10 years ago and unbeknownst to me received a fraudulent appraisal which dumped me into the sub-prime pool even though I’ve always had a 700+ fico. my place is worth $100k less than what i paid for it and i have never missed a payment but citi refuses to help.

for more about Citigroup do a search within the blog called

Brian J. Donovan

Aug. 1, 2010, 5:23 a.m.

To better understand how subprime mortgage-backed credit derivatives brought the U.S. economy to the brink of a second Great Depression, visit:

The Story is Great, but I
I hope it is not a blaim on Mr. Clinton. When he was the president many of us did a lot better then When G.W. ran this Country in to the ground.
Lets not forget when Bill Clinton gave the Presidency to Busch our country had a healthy surplus. Which later was squandered by Busch. 

If the Busch administration would of refuse the 850 Billion dollar bail out to Henry Paulson, and instead would of backed the home mortgages the housing market would not be where is it today.

2. If Ben Bernanke would of stopped increasing the interest rates , we could of avoided the collapse in the real estate market. Even Donald Trump on CNN Larry King spoke up about and sad. “Bernanke is killing the golden goose.” I new it and Donald Trump new it. I believe Bernanke new it too.

It would be interesting to know how much this taxpayer supported company budgets for fines each year. They must surely hold some sort of record by now for most fines paid by any corporation.

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