Citigroup kåret som månedens krigsprofitør
Posted by Fredsvenn den desember 26, 2008
Citigroup Inc. led store tap fra Subprime lån, den såkalte subprime mortgage krisen, se Den globale finanskrisen i 2008, og måtte ty til kilder som Abu Dhabi Investment Authority og regjeringen i Singapore for 20 milliarder dollar i kapitaluttrekk. Den ble reddet av en massiv bailout av den amerikanske regjeringen etter at det i november 2008 kom ble laget en avtale hvor Citigroup fikk en pakke med garantier, likviditet og kapital.
Citigroup Inc., opererende som Citi, er et større finansselskap med hovedbase i New York City. Etter å ha blitt dannet via en sammenslåing av Citicorp og Travelers Group i 1998 har selskapet 332,000 ansatte rundt om i verden og holder over 200 millioner kontoer i mer enn 100 land. Det er verdens største inntektsbank i 2008. Det er hovedforhandler i US Treasury verdipapirer og dets beholdning har vært en del av Dow Jones Industrial Average siden 1997.
Citigroup Inc. har vært innblandet i flere av de største finansskandalene som har funnet sted i de siste tiårene, inkludert Enron skandalen, WorlCom kollapset og Terra Securities skandalen i november 2007 som involverte investeringer gjort av 8 kommuner i Norge i ulike Hedge funds i USAs Bond market, også kjent som lån, kreditt eller fixed income marked, som vil si et finansmarked hvor deltagerne kjøper og selger gjeld. Citigroup ble allerede i 2004 kritisert for å ødelegge for det europeiske bond markedet gjennom å selge 11 milliarder euro i verdier via MTS Group handelsplattform, drive ned prisene for deretter å kjøpe det hele tilbake igjen til en billigere pris. Fondene ble solgt til kommunene av Terra Securities ASA, mens produktene ble levert av Citigroup.
Bailout var en stor profittmulighet for disse finansinstitusjonene og deres aksjeholdere og beskrevet av Naomi Klein i hennes artikkel The Bailout Profiteers som: ”this is what U.S. taxpayers received: no controlling interest, no voting rights, no seats on the bank boards and just five percent in dividend payouts to the government, while shareholders continue to collect billions in dividends every quarter. What’s more, golden parachutes and bonuses already promised by the banks will still be paid out to executives — all before taxpayers are paid back.” Det stor togrøveriet som har blitt popularisert gjennom diverse romaner kan ikke en gang sammenlignes.
Naomi Klein: Iraq was the trough for awhile. The Department of Homeland Security has been a pretty good trough. Building Fortress Europe has been a good trough. And what I mean by public money that is just transferred to private corporations in the name of fighting an endless war on terror. And we see it in this feeding frenzy around the world. The Green Zone is sort of, maybe, the epicenter of this feeding frenzy. But China is the new trough, because basically what the government in Beijing has said is, «We will spend whatever it takes to secure our country, and we want the latest technology and the best toys.»
The New Trough : ”The Wall Street bailout looks a lot like Iraq — a «free-fraud zone» where private contractors cash in on the mess they helped create” – Naomi Klein
On March 23, 2005, the NASD announced total fines of $21.25 million against Citigroup Global Markets, Inc., American Express Financial Advisors and Chase Investment Services regarding suitability and supervisory violations relating to mutual fund sales practices between January 2002 and July 2003. The case against Citigroup involved recommendations and sales of Class B and Class C shares of mutual funds.
On June 6, 2007, the NASD announced more than $15 million in fines and restitution against Citigroup Global Markets, Inc., to settle charges related to misleading documents and inadequate disclosure in retirement seminars and meetings for BellSouth Corp. employees in North Carolina and South Carolina. NASD found that Citigroup did not properly supervise a team of brokers located in Charlotte, N.C., who used misleading sales materials during dozens of seminars and meetings for hundreds of BellSouth employees.
On August 26, 2008 it was announced that Citigroup agreed to pay nearly $18 million in refunds and fines to settle accusations by California Attorney General Jerry Brown that it wrongly took funds from the accounts of credit card customers. Citigroup would pay $14 million of restitution to roughly 53,000 customers nationwide. A three-year investigation found that Citigroup from 1992 to 2003 used an improper computerized «sweep» feature to move positive balances from card accounts into the bank’s general fund, without telling cardholders.
Brown said in a statement that Citigroup «knowingly stole from its customers, mostly poor people and the recently deceased, when it designed and implemented the sweeps…When a whistleblower uncovered the scam and brought it to his superiors, they buried the information and continued the illegal practice.»
Citigroup is the 16th largest political campaign contributor, out of all organizations, according to the Center for Responsive Politics. Members of the firm have donated over $23,033,490 from 1989-2006, 49% of which went to Democrats and 51% of which went to Republicans. According to Matthew Vadum, a senior editor at the conservative Capital Research Center, Citigroup is also a heavy contributor to left of center political causes.
On 24 November 2008 the U.S. government announced a massive bailout of Citigroup, designed to rescue the company from bankruptcy while giving the government a major say in its operations. It was the largest bailout in history. The Treasury will provide another $20 billion in TARP funds in addition to $25 billion given in October. The Treasury Department, the Federal Reserve and the FDIC will cover 90% of the losses on its $335-billion portfolio after Citigroup absorbs the first $29 billion in losses. In return the bank will give Washington $27 billion of preferred shares and warrants to acquire stock. The government will obtain wide powers over banking operations. Citigroup has agreed to try to modify mortgages, using standards set up by the FDIC after the collapse of IndyMac Bank, with the goal of keeping as many homeowners as possible in their houses. Executive salaries will be capped.
US Treasury and the Federal Deposit Insurance Corporation (FDIC) agreed to back $306 billion of residential and commercial loans and securities on Citigroup’s balance sheet. In exchange, Citigroup agreed to issue preferred shares to the Treasury and FDIC. Treasury also agreed to invest $20 billion in Citigroup from the Troubled Asset Relief Program (TARP) in exchange for preferred stock with an 8% dividend to the Treasury. The day before the announced agreement the company’s stock was trading at $3.77 — a price that represents a total loss of $244 billion in value in just two years. Citigroup also agreed to comply with executive compensation restrictions, and the FDIC’s mortgage modification program. Citi simultaneously announced that it would cut 52,000 jobs.
As the subprime mortgage crisis began to unfold, heavy exposure to toxic mortgages in the forms of Collateralized debt obligation (CDO’s), compounded by poor risk management led the company into serious trouble. In early 2007 Citigroup began eliminating about 5 percent of its workforce, in a broad restructuring designed to cut costs and bolster its long underperforming stock. By November 2008, the ongoing crisis hit Citigroup hard and despite federal TARP bailout money, the company announced further cuts. Its stock market value dropped to $21 billion, down from $244 billion two years prior. As a result, Citigroup and Federal regulators negotiated a plan to stabilize the company. Its single largest shareholder is Prince Al-Waleed bin Talal of Saudi Arabia, who has a 4.9% stake. Vikram Pandit is Citigroup’s current CEO, while Sir Win Bischoff the current chairman.