On Monday the Department of Justice and Attorney General Eric Holder announced a meager $7 billion settlement with Citigroup for causing the most severe financial crisis since the Great Depression by fraudulently selling mortgage securities that wrecked the financial markets. AG Holder celebrated the settlement and claimed “This historic penalty is appropriate given the strength of the evidence of the wrongdoing committed by Citi.”
But, according to The Litigation Daily, the details of that “wrongdoing” are nowhere to be found in the settlement documents, raising questions as to whether DOJ gave Citigroup a special deal regarding disclosure. Was part of this “historic penalty” an exemption from having to admit the crimes committed and the victims harmed?
If you read the government’s statement of facts, evidence of Citi’s actions, strong or otherwise, is hard to find. This document, which should contain the meat of the case, is all of nine pages long. It’s shockingly thin on details, largely relying on boilerplate to describe what most people who follow these cases already know: Citi sold RMBS that it knew were backed by subpar loans. And it doesn’t contain a single word about Citi’s massive CDO operation…
While the government has touted the evidence it unearthed, it only mentions one email in the entire statement of facts, and it doesn’t cite the testimony of a single witness. The sole email, which is undated, was written by an unnamed Citigroup trader commenting on a due diligence review of loan files, and the government doesn’t reveal who received the message. The trader stated that he “went through the diligence reports and think[s] [they] should start praying . . . It’s amazing that some of these loans were closed at all.” There’s nothing at all about the bank’s CDO operations.
A $7 billion fine for one email? What about those who were victimized and what Citigroup and its executives actually did to warrant the penalty?