Seeking Alpha

Rumored Citi settlement out of line

  • The bank issued $91B in private-label MBS between 2005 and 2008, say Morgan Stanley's Betsy Graseck and Manan Gosalia. That's just 20% of what JPMorgan sold and 14% of Bank of America's issuance.
  • The reported $7B settlement would amount to 7.7% of Citigroup's (C -0.3%) pre-crisis issuance vs. JPMorgan's 2% settlement - this despite the fact that losses on Citi's MBS book were inline with its peer group. Nevertheless, the team notes these press rumors have been somewhat on the mark and cut their Q2 EPS estimate by $0.70 to $0.40 to account for the $4B hard-dollar amount (the other $3B is for borrower relief).
  • Up next is Bank of America (BAC -0.2%), which will now see boosted pressure to reach a deal with the DOJ, and Morgan has baked in a $12B settlement, or 1.8% of the face amount of securities issued. Other press reports have suggested a number closer to $17B.
Comments (72)
  • Tippydog
    , contributor
    Comments (1806) | Send Message
     
    The governments thug like shakedown of banks is disgusting.

     

    In the case of Citi, the govenment made no disclosure of the intent to pull this stunt when it was selling off its billions of dollars of stock to investors.

     

    There is no effective way to fight the government in court, and thus political wannabes like Eric Holder can effectively act like shareholder strike suit lawyers or patent trolls to look like heroes.

     

    The amounts involved in these shakedowns are an affront to any concept of evenhanded regulation. Its unfair, its destructive to stability in our banking system, and its chaotic.

     

    As Warren Buffett has pointed out under oath, everyone active in the housing market made the shared mistake of believing there was price stability. To shake down a handful of large banks, just because the skew in the legal system makes this kind of stunt possible, undermines both the credibility of government and the credibility of the financial system.

     

    We should all recoil at these tactics.
    9 Jul, 12:03 PM Reply Like
  • JD in NJ
    , contributor
    Comments (807) | Send Message
     
    While I agree that the amount is oversized. It's also long overdue. Justice isn't revenge, and should not be served cold.
    9 Jul, 12:15 PM Reply Like
  • mxs1224
    , contributor
    Comment (1) | Send Message
     
    a large fine would be acceptable IF it went toward helping the consumer , but its just a plain greed on the politicians part to fund their pork filled budgets , lets just call ita tax or nationalize the banking suytem, defacto thats what we have with no end in sight
    9 Jul, 12:53 PM Reply Like
  • funfun
    , contributor
    Comments (2017) | Send Message
     
    Consumers and investors are indeed and in fact helped. Massive fines will make corrupt executives think twice about embracing a CHEAT-to-COMPETE culture, and defrauding unsuspecting men and women and retirement funds out of tens of $billions. …funfun..
    9 Jul, 12:56 PM Reply Like
  • JD in NJ
    , contributor
    Comments (807) | Send Message
     
    I should think that massive fines levied directly against those executives would be more effective.
    9 Jul, 01:00 PM Reply Like
  • jackooo
    , contributor
    Comments (1489) | Send Message
     
    Someone voted Democrat!
    9 Jul, 01:11 PM Reply Like
  • jackooo
    , contributor
    Comments (1489) | Send Message
     
    fun fun
    You have to be smoking some of the Oregon weed, dude!!!!
    Massive fines are levied on the company, not the individual! It is levied on the stock holders, not the perpetrators of the fraud.
    Ken Lay retired with his stock portfolio in tact. He kept his retirement package, cars, houses, airplanes, etc.
    The stock holders that bought in the $40's lost. The executives made out like the bandits they are. No trials. No jail time. N O T H I N G!!!
    The same cycle can run again with fraud. There is NO accountability unless they have skin in the game. I refer to their personal bank accounts, planes, houses, jewelry, etc.
    It has started again and few will be caught & convicted!!
    9 Jul, 01:20 PM Reply Like
  • jackooo
    , contributor
    Comments (1489) | Send Message
     
    Yes, but the fines are against the bank, not the executives.
    9 Jul, 01:21 PM Reply Like
  • Wow72
    , contributor
    Comments (425) | Send Message
     
    Wrongwrong,

     

    Your statement: "Consumers and investors are indeed and in fact helped. Massive fines will make corrupt executives think twice about embracing a CHEAT-to-COMPETE culture, "

     

    B.S. it wont change a thing......At the total expense of shareholders....NOT one meaningful law changed through all of this except FIRREA Which is B.S. To begin with....The government are the "crooks" Wrongwrong...someday when it all comes crashing down you might get it but I doubt it.....Why do you trust your government so??...even though they have screwed you time and time again.
    9 Jul, 01:55 PM Reply Like
  • SupplyMarket2595
    , contributor
    Comments (3) | Send Message
     
    If consumers are that stupid they deserve what they get
    9 Jul, 02:06 PM Reply Like
  • Wow72
    , contributor
    Comments (425) | Send Message
     
    Wrongwrong,

     

    Answer this question...Where is the "justice"?.... By ripping money out of shareholders pockets? Really? How? Hurting Who? Everyone except who their trying to get?

     

    Our government is really the biggest and best "con" game in town...
    9 Jul, 02:54 PM Reply Like
  • Wow72
    , contributor
    Comments (425) | Send Message
     
    jackooo,

     

    If this guy was smoking weed I guarantee you he would not be this far gone! He would sound a little more mellow and not be quite as jacked up I believe...less combative...Hes kind of the opposite...Like a little crackhead or something...Like that politician who was he?
    9 Jul, 03:03 PM Reply Like
  • funfun
    , contributor
    Comments (2017) | Send Message
     
    Bank of America's corrupt Management hawked and peddled $850 billion of rubbish as prime or near prime paper. Proportional to Citigroup's fraud, Bank of America would be on the hook for $50 billion in settlements/fines. Realistically, something on the order of $12 to $18 billion might be on tap. But who knows at this point, given the Bank was the world-class leader amongst American financial institutions in fraud-mongering and law-breaking in the 21st century? …funfun..
    9 Jul, 12:48 PM Reply Like
  • Hubert Biagi
    , contributor
    Comments (689) | Send Message
     
    Get your facts straight. Wasn't rubbish, was AAA according to all the rating agencies. And it was pseudo government agencies, Fannie and Freddie, just as greedy and "fraud-mongering", which started large scale, private securitization, in order to meet their HUD goals. In fact, when Citibank resisted the move into subprime, it was Acorn that led the charge and eventually helped, along with the pseudos, to force all the big banks into bad lending practices. It was Fannie's CEO Raines who argued to Congress that "we launched a redoubled new pledge… to provide $2 trillion for 18 million underserved families before this decade is over. …we are one of the best capitalized financial institutions in the world, when compared to the risk of our business… …these assets are so riskless that their capital for holding them should be under 2 percent.” People who didn't remotely qualify a few years earlier, were now getting interest only loans, with nothing down. And it was the Community Reinvestment Act that started all of it. Then years of mindless attacks by the Barney Franks on anyone who questioned these progressive policies. The result? In today's economy, you have an Apple, with a market cap larger than the four big banks, employing only about 60,000 Americans, while what's left of the big four, still manage to employ about a million. Think about that next time you're demonizing banks while enjoying your Isomething/Twitter/Fac... "social experience".
    9 Jul, 01:25 PM Reply Like
  • funfun
    , contributor
    Comments (2017) | Send Message
     
    Maybe you should "get your facts straight" before lecturing condescendingly. It was rubbish. In many instances, as you should know, the "AAA" ratings were faked and fraudulent, bearing no reality to the paper valued and pawned off on investors and institutional buyers! The rating agencies were just as corrupt as Bilk of America.

     

    If all of this cheap paper were truly "AAA", the Bank would not be confronted with multiple prosecutions and a massive fine to settle potentially as much as $18 billion, would it? …funfun..
    9 Jul, 01:32 PM Reply Like
  • jackooo
    , contributor
    Comments (1489) | Send Message
     
    Your conclusion seems to be that ALL these financial institutions bought a pig in a poke! If so, maybe they should not of been in business?
    9 Jul, 03:06 PM Reply Like
  • Don Dion
    , contributor
    Comments (2632) | Send Message
     
    Hubert,

     

    It was the megabanks responsibility to make the credit decisions and not the rating agencies.

     

    Don
    9 Jul, 03:48 PM Reply Like
  • Don Dion
    , contributor
    Comments (2632) | Send Message
     
    I would not be surprised to see BAC write a HUGE check to settle this matter. Don't see them going to trial.
    9 Jul, 01:19 PM Reply Like
  • Hello Again 83
    , contributor
    Comments (431) | Send Message
     
    Dream on Don
    9 Jul, 01:35 PM Reply Like
  • Hello Again 83
    , contributor
    Comments (431) | Send Message
     
    BAC will take it to trial.
    9 Jul, 01:35 PM Reply Like
  • Don Dion
    , contributor
    Comments (2632) | Send Message
     
    Hello,

     

    You must be kidding. Look at what JPM, Citi, and the major foreign banks have done. The CEO does not want to lose his corner office and his private jets. These guys like to know their pilots names.

     

    Don
    9 Jul, 02:05 PM Reply Like
  • Hello Again 83
    , contributor
    Comments (431) | Send Message
     
    He wont lose his office but will settle for allot less as well as they should. It is the right thing to do. The DOJ has to be stopped once and for all. Moynihan will take it to trial. "Unless the DOJ wises up"
    9 Jul, 02:11 PM Reply Like
  • Seanebr
    , contributor
    Comments (113) | Send Message
     
    I hope they do take it to trial. Unbelievable what Obama's cronies are getting away with...
    9 Jul, 02:49 PM Reply Like
  • Wow72
    , contributor
    Comments (425) | Send Message
     
    Sounds like they are going to http://yhoo.it/1nffWuN Holder wont meet.... What a jerk! These guy are arrogant Aholes! Im so sick of this "better" than attitude out of these jerks!
    9 Jul, 05:25 PM Reply Like
  • Seanebr
    , contributor
    Comments (113) | Send Message
     
    Wow72 - The arrogance of this guy! Won't even meet with him? At this point Moynihan should just give Holder the finger and say "I'll see you in court bi&#h!"
    9 Jul, 06:11 PM Reply Like
  • Don Dion
    , contributor
    Comments (2632) | Send Message
     
    Not a wise thing to do to the President's main man.
    9 Jul, 08:07 PM Reply Like
  • Seanebr
    , contributor
    Comments (113) | Send Message
     
    Assuming the trial goes on for one year, $17B invested even at 1% will yield an extra $170M for BAC shareholders! I say go for it Mr. Moynihan! Fight this thing, drag it out as long as you can and enjoy that TVM!
    9 Jul, 09:45 PM Reply Like
  • Don Dion
    , contributor
    Comments (2632) | Send Message
     
    It may be 25 really big ones if they go to trial and lose.
    9 Jul, 09:50 PM Reply Like
  • jackooo
    , contributor
    Comments (1489) | Send Message
     
    Eric Holder is Obama's shill! Just like Joe Biden. With that established Obama directs Holder. Obama is a confirmed Muslim. Check the family history before you show me any ignorance of the subject.
    To ruin the economy and bring down the infidels is the MAIN goal of Obama. If you will relate to this one fact you will see why the Nation is in crisis.
    Fox news shills for Obama. They are either ignorant or working for him because they have never said he is trying to destroy the country with debt, race versus race, rich versus poor or IRS intrusions or NSA surveilance.
    The stock market goes up in spite of this. Some of the reasoning is that companies are NOW finally reigning in some of their excesses as far as buildings, employees,expansion and debt. They have awakened to the word frugality.
    10 Jul, 12:22 PM Reply Like
  • JD in NJ
    , contributor
    Comments (807) | Send Message
     
    That... was delusional.
    10 Jul, 12:25 PM Reply Like
  • TFCAB
    , contributor
    Comments (1942) | Send Message
     
    Eric Holder >>> the Jesse James of our era.....best bank robber around
    9 Jul, 01:36 PM Reply Like
  • jackooo
    , contributor
    Comments (1489) | Send Message
     
    Don't forget his partner!
    9 Jul, 01:41 PM Reply Like
  • Don Dion
    , contributor
    Comments (2632) | Send Message
     
    Even Jesse James was not handed billions and billions.

     

    Our president and our United States Attorney General is merely trying to send these Wall street types a lesson. The billions and billions will also help with our needed social programs.

     

    Don
    9 Jul, 02:07 PM Reply Like
  • Seanebr
    , contributor
    Comments (113) | Send Message
     
    Don Dion - Please explain what "lesson" Ken Lewis and Angelo Mozillo are learning as a result of the DOJ suing Bank of America 7 years after the financial crisis?

     

    The people who actually committed the crimes are lounging under an umbrella on a beach in Tahiti drinking mai tais as we speak!

     

    The only people who are getting taught a "lesson" are the customers, shareholders and employees of these big banks - who will most likely never vote Democrat ever again!
    9 Jul, 02:32 PM Reply Like
  • jackooo
    , contributor
    Comments (1489) | Send Message
     
    lol lol The President!! lol lol He just asked for 3.7 BILLION for his illegals.
    9 Jul, 03:09 PM Reply Like
  • Don Dion
    , contributor
    Comments (2632) | Send Message
     
    Seanebr,

     

    They did lose their jobs. They also have to live with the fact that they, with their management teams and boards of directors, put together the biggest acquisition disaster in the banking history. Not a great thing to live with in the Hamptons and Palm Beach.

     

    Don
    9 Jul, 03:52 PM Reply Like
  • Wow72
    , contributor
    Comments (425) | Send Message
     
    Don, If they are trying to teach these "Wall Street" types a lesson, Will you tell them to stop beating the hell out of me? I guess they are blind?
    9 Jul, 05:40 PM Reply Like
  • Don Dion
    , contributor
    Comments (2632) | Send Message
     
    Wow72,

     

    I'll give your president a call and see what he can do for you :)

     

    Don
    9 Jul, 05:45 PM Reply Like
  • Wow72
    , contributor
    Comments (425) | Send Message
     
    You do that buddy, Ill be waiting..
    9 Jul, 05:50 PM Reply Like
  • Seanebr
    , contributor
    Comments (113) | Send Message
     
    So the criminals who nearly brought down the world's financial system got merely a slap on the wrist - and that's OK with you - and the companies they managed are being sued for $Billions, several years past the statute of limitations cutoff, in the process retarding economic growth and crimping homeowner and small business lending for your beloved 99%. Brilliant!
    9 Jul, 05:55 PM Reply Like
  • Wow72
    , contributor
    Comments (425) | Send Message
     
    Don,
    I guess thats why your here right? For balance? because there is none?... I can count the people on one hand who agree with you...Where again is the real balance? and not the fake, made up balance?
    9 Jul, 07:19 PM Reply Like
  • Don Dion
    , contributor
    Comments (2632) | Send Message
     
    Wow72,

     

    He said to just have Citi mail the check. The folks need help from the .1%.

     

    Don
    9 Jul, 08:08 PM Reply Like
  • Don Dion
    , contributor
    Comments (2632) | Send Message
     
    Wow,

     

    As you know, most Wall Street analysts are always bullish on the big megabuck banks because of all the fees they pay to the investment bankers. We are trying to add some balance to that bias view. We realize we will be criticized by the majority of shareholders that are long the stock who are receiving their penny dividend.

     

    Don

     

    Don
    9 Jul, 08:11 PM Reply Like
  • Wow72
    , contributor
    Comments (425) | Send Message
     
    Sure its not Wrong Wrong?

     

    I think the last thing we are getting is balance...The economy is unfairly getting the crap kicked out of it to prove a B.S. point for kids with huge egos....The banks all caused this..B.S.! Get over it! Lets move on!
    9 Jul, 08:26 PM Reply Like
  • Don Dion
    , contributor
    Comments (2632) | Send Message
     
    Wow,

     

    You are right. Plenty of blame to go around but in the final analysis, the management at the banks made the credit decisions on these bad loans.

     

    Don
    9 Jul, 08:49 PM Reply Like
  • jackooo
    , contributor
    Comments (1489) | Send Message
     
    Governor Perry of Texas, said last night, that 2% OF THE 3.7 billion WAS FOR BORDER SECURITY... The rest to help the illegals.
    10 Jul, 12:24 PM Reply Like
  • funfun
    , contributor
    Comments (2017) | Send Message
     
    Remarkable, folks, how the criminals are blaming the police because they have been arrested and prosecuted!

     

    Gotta laugh…funfun..
    9 Jul, 01:40 PM Reply Like
  • Seanebr
    , contributor
    Comments (113) | Send Message
     
    Nobody is laughing but you...
    9 Jul, 02:17 PM Reply Like
  • jackooo
    , contributor
    Comments (1489) | Send Message
     
    Err who was prosecuted? Ken Lay???
    9 Jul, 03:11 PM Reply Like
  • JD in NJ
    , contributor
    Comments (807) | Send Message
     
    This is more like selling indulgences
    9 Jul, 03:11 PM Reply Like
  • Wow72
    , contributor
    Comments (425) | Send Message
     
    Funny, how the police in this country are a corrupt group of thugs...
    9 Jul, 05:18 PM Reply Like
  • Don Dion
    , contributor
    Comments (2632) | Send Message
     
    jackoooo,

     

    Ken is no longer with us.

     

    Don
    9 Jul, 08:12 PM Reply Like
  • jackooo
    , contributor
    Comments (1489) | Send Message
     
    fun fun was saying the criminals were prosecuted. Well they were not! Ken Lay was not prosecuted. I consider him a criminal. There has to be more to the story then a ahhh shucks I goffed up when he bought Countrywide.
    The books were definitely not reviewed properly or $$$ passed under the table or ???? Regardless charges should of been brought. Not an attorney but something should of been done to him.
    10 Jul, 01:35 PM Reply Like
  • funfun
    , contributor
    Comments (2017) | Send Message
     
    What in the world are you talking about?

     

    Ken Lay of ENRON was indeed and in fact prosecuted! And he was convicted on security fraud and wire fraud.

     

    And that brings us to Bank of America which has broken down from its own Management culture of ENRON ETHICS for more than a decade!

     

    ...funfun..
    10 Jul, 03:10 PM Reply Like
  • Seanebr
    , contributor
    Comments (113) | Send Message
     
    Mr. Obama and his incompetent cronies have for years resorted to the socialist/ communist methodologies of stealing from the banks and giving to the poor - the crack-ho's, the homeless, the illegal immigrants, and the hopelessly unmotivated, lazy and self-entitled lower class.

     

    And who is ultimately responsible for all of this? We, the gullible and ignorant people of this country who bought into Obama's pathological web of lies, all beginning with: "Yes we can!"
    9 Jul, 02:24 PM Reply Like
  • jackooo
    , contributor
    Comments (1489) | Send Message
     
    There is not a smidgen of truth to what you say. lol lol

     

    9 Jul, 03:12 PM Reply Like
  • Seanebr
    , contributor
    Comments (113) | Send Message
     
    Your statement not being backed by even a "smidgen" of fact makes it nothing but your personal opinion and of no value to anybody...
    9 Jul, 03:42 PM Reply Like
  • Don Dion
    , contributor
    Comments (2632) | Send Message
     
    Sean,

     

    Our leader certainly has not been afraid to take on Wall Street and the 99% are benefitting from the billions and billions that he is collecting.

     

    Don
    9 Jul, 03:54 PM Reply Like
  • Wow72
    , contributor
    Comments (425) | Send Message
     
    Don,
    They also weren't afraid to sent 100's of thousands of jobs out of the country either....Which is what caused most of these defaults..
    9 Jul, 05:44 PM Reply Like
  • Seanebr
    , contributor
    Comments (113) | Send Message
     
    Don - I think you are confusing the 99% with 15%. As far as I'm concerned, the only people who have benefited from Obama's actions so far have been the 46 million Americans living below the poverty line. Oh, and illegal aliens of course...

     

    The rest of us have been suffering through a sluggish economy and an artificially low unemployment rate based on part-time and temp labor...
    9 Jul, 06:01 PM Reply Like
  • Don Dion
    , contributor
    Comments (2632) | Send Message
     
    Sean,

     

    Why are you not willing to help the 46 million Americans who have been hurt by these megabuck banks?

     

    Don
    9 Jul, 08:14 PM Reply Like
  • Seanebr
    , contributor
    Comments (113) | Send Message
     
    Don,

     

    I believe there are effective ways to help the lower class. Just taking money from banks and throwing it at illegal immigrants and high school drop-outs who have 8 kids - 7 of which they can't afford to take care of - isn't one of them.

     

    The way to help the 15% is by first getting the other 85% back to investing, spending and working. Once that happens there will be plenty of ditch-digging and janitorial jobs to go around for your beloved 15%, so they can continue being a drag on the economy on a tolerable level...
    9 Jul, 10:00 PM Reply Like
  • Don Dion
    , contributor
    Comments (2632) | Send Message
     
    Sean,

     

    I think your view of the 99% is pretty harsh.

     

    All Americans need to be considered. These billion dollar payments by Wall Street Bigwigs will help many Americans.

     

    Don
    9 Jul, 10:30 PM Reply Like
  • Seanebr
    , contributor
    Comments (113) | Send Message
     
    Don,

     

    If you read over my comment again it actually covers 100% of Americans, so my philosophy actually helps more people than yours :).

     

    Where we differ is in methodology. One method allocates capital efficiently, in a place where it can grow and increase in value, while the other just drops money into a bottomless pit...

     

    Read Atlas Shrugged by Ayn Rand. It'll all make sense...You'll also notice some of the fictional characters in the book are shockingly similar to the people Mr. Obama surrounds himself with...
    9 Jul, 10:38 PM Reply Like
  • Don Dion
    , contributor
    Comments (2632) | Send Message
     
    Sean,

     

    Thank you for your suggestion. I'll check the book out.

     

    Don
    10 Jul, 07:21 AM Reply Like
  • Wow72
    , contributor
    Comments (425) | Send Message
     
    Don your quote: "Why are you not willing to help the 46 million Americans who have been hurt by these megabuck banks?"

     

    What about our government holding up a dividend taxpayers paid for, but haven't gotten because the government has had the urge to sue shareholders for six years and counting? With over 10 billion shares outstanding thats lots of hurting people with 401k's on the other side too, this is a real losing battle for this DOJ and everyone seems to get that except them! Thats the PROBLEM!
    12 Jul, 06:31 AM Reply Like
  • Don Dion
    , contributor
    Comments (2632) | Send Message
     
    I think our President will send all those billions and billions in fines back the the "folks".
    13 Jul, 08:56 PM Reply Like
  • Wow72
    , contributor
    Comments (425) | Send Message
     
    Oh ya how??? Einstein? I have a feeling I wont get crap and there is already an issue with the transparency of how C's money will be spent and because I was a RESPONSIBLE BORROWER I wont get a DIME!
    15 Jul, 09:09 AM Reply Like
  • Don Dion
    , contributor
    Comments (2632) | Send Message
     
    Update- See http://seekingalpha.co...
    9 Jul, 02:49 PM Reply Like
  • vikramnjnjjdjnd
    , contributor
    Comments (284) | Send Message
     
    Why own bac? It is emotional roller coaster better banks to own like wfc
    9 Jul, 03:33 PM Reply Like
  • Don Dion
    , contributor
    Comments (2632) | Send Message
     
    vik,

     

    We agree with you. We are a lot more comfortable with the dividend and the management at WFC.

     

    Don
    9 Jul, 08:15 PM Reply Like
  • jackooo
    , contributor
    Comments (1489) | Send Message
     
    A $1 move in BAC negates the WFC dividend. That move equates to over 6%. Will BAC move $1 this year? If so it equates to over 12%.
    10 Jul, 01:39 PM Reply Like
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