Our Common Good

Goldman Sachs, Morgan Stanley, JPMorgan Chase, Bank of America and Citigroup all suffered credit ratings cuts on Thursday. The rating agency Moody’s Investors Service said that, even though these banks had moved to strengthen their operations, their core trading businesses contained structural weaknesses.

In other words, the downgrades reflect the new sober era for Wall Street.

Since Moody’s put the banks on warning in February, the firms have had time to brace themselves and the immediate impact of the cuts is not likely to be drastic. But banking industry analysts say they think Moody’s actions will cause lasting pain.

Great story where the good gal actually wins - and it is a win for all of us.  Gotta love her background…

Sherry Hunt never expected to be a senior manager at a Wall Street bank. She was a country girl, raised in rural Michigan by a dad who taught her to fish and a mom who showed her how to find wild mushrooms. She listened to Marty Robbins and Buck Owens on the radio and came to believe that God has a bigger plan, that everything happens for a reason.

She got married at 16 and didn’t go to college. After she had her first child at 17, she needed a job. A friend helped her find one in 1975, processing home loans at a small bank in Alaska. Over the next 30 years, Hunt moved up the ladder to mortgage-banking positions in Indiana, Minnesota and Missouri, Bloomberg Markets magazine reports in its July issue.

Days after being rebuked by shareholders, Citigroup Inc Chief Executive Vikram Pandit and the bank’s directors have been sued for allegedly awarding outsized pay to top executives.

The complaint filed Thursday in Manhattan federal court accuses directors of breaching their fiduciary duties by awarding more than $54 million of compensation in 2011 to the executives, including $15 million to Pandit, though the bank’s performance did not necessarily justify it.

At Citigroup’s annual meeting on Tuesday, about 55 percent of shareholders participating in an advisory vote rejected Pandit’s pay package. That marked the first time that investors had rejected a compensation plan at a major U.S. bank.

That vote “has cast doubt on the board’s decision-making process, as well as the accuracy and truthfulness of its public statements,” the complaint said. “Absent this (lawsuit), the majority will of the company’s stockholders shall be rendered meaningless.”

In a stinging rebuke, Citigroup shareholders rebuffed on Tuesday the bank’s $15 million pay package for its chief executive, Vikram S. Pandit, marking the first time that stock owners have united in opposition to outsized compensation at a financial giant.

The shareholder vote, which comes amid a rising national debate over income inequality, suggests that anger over pay for chief executives has spread from Occupy Wall Street to wealthy institutional investors like pension fund and mutual fund managers. About 55 percent of the shareholders voting were against the plan, which laid out compensation for the bank’s five top executives, including Mr. Pandit.

occupyonline:

CITIGROUP is lucky that Muammar el-Qaddafi was killed when he was. The Libyan leader’s death diverted attention from a lethal article involving Citigroup that deserved more attention because it helps to explain why many average Americans have expressed support for the Occupy Wall Street movement. The news was that Citigroup had to pay a $285 million fine to settle a case in which, with one hand, Citibank sold a package of toxic mortgage-backed securities to unsuspecting customers — securities that it knew were likely to go bust — and, with the other hand, shorted the same securities — that is, bet millions of dollars that they would go bust.

It doesn’t get any more immoral than this. As the Securities and Exchange Commission civil complaint noted, in 2007, Citigroup exercised “significant influence” over choosing $500 million of the $1 billion worth of assets in the deal, and the global bank deliberately chose collateralized debt obligations, or C.D.O.’s, built from mortgage loans almost sure to fail. According to The Wall Street Journal, the S.E.C. complaint quoted one unnamed C.D.O. trader outside Citigroup as describing the portfolio as resembling something your dog leaves on your neighbor’s lawn. “The deal became largely worthless within months of its creation,” The Journal added. “As a result, about 15 hedge funds, investment managers and other firms that invested in the deal lost hundreds of millions of dollars, while Citigroup made $160 million in fees and trading profits.”

liberalsarecool:

The SEC announced Wednesday that Citigroup agreed to pay $285 million to settle charges that it misled (synonyms for that word include deceived; lied to; tricked and defrauded) investors in a mortgage securities deal, telling them it was a good investment when it knew otherwise and was secretly…

The SEC announced yesterday that Citigroup agreed to pay $285 million to settle charges that it misled (synonyms for that word include deceived; lied to; tricke and defrauded) investors in a mortgage securities deal, telling them it was a good investment when it knew otherwise and was secretly betting it would fail.

That’s not just slimy. As the Financial Crisis Inquiry Commission found in other instances, that kind of behavior is also illegal.

Here are five reasons you should be outraged.[…]

Monday’s results reflected Citigroup’s seventh straight quarter of income growth. Citigroup was one of the biggest recipients of taxpayer support during the financial crisis. It received $45 billion in bailouts funds and was partly owned by the government until December 2010.

In the wake of the financial crisis, a number of the nation’s largest banks were excused from the government’s rescue program before they had returned to a position of complete financial security — in part because they wanted to avoid restrictions on how much their executives would get paid, according to a new report from the program’s government overseer.

Citigroup, Wells Fargo, PNC and Bank of America successfully lobbied to leave the federal bailout program early in 2009, even though the Federal Reserve Board and the Federal Deposit Insurance Corporation had recommended they take additional steps to shore up their assets, according to a new report from the Special Inspector General for the Troubled Relief Asset Program, a government watchdog office.

Treasury Assistant Secretary Tim Massad released this statement in response to the report:

“We are pleased that the report acknowledges that the nation’s largest banks are much stronger today as a result of the actions the government took. Treasury wanted the major banks to raise private capital and repay taxpayers because that was necessary to restore stability and strength to the financial system. Moreover, we estimate that taxpayers will realize a $20 billion gain on the assistance to banks provided under TARP.”

thoseboringpolitics:

What was revealed in the audit was startling: $16,000,000,000,000.00 had been secretly given out to US banks and corporations and foreign banks everywhere from France to Scotland. From the period between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the world’s banks, corporations, and governments. The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest.

Citigroup: $2.5 trillion ($2,500,000,000,000)
Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
Bank of America: $1.344 trillion ($1,344,000,000,000)
Barclays PLC (United Kingdom): $868 billion ($868,000,000,000)
Bear Sterns: $853 billion ($853,000,000,000)
Goldman Sachs: $814 billion ($814,000,000,000)
Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
JP Morgan Chase: $391 billion ($391,000,000,000)
Deutsche Bank (Germany): $354 billion ($354,000,000,000)
UBS (Switzerland): $287 billion ($287,000,000,000)
Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
Lehman Brothers: $183 billion ($183,000,000,000)
Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
BNP Paribas (France): $175 billion ($175,000,000,000)
and many many more including banks in Belgium of all places

And here we have the evil of the Fed exposed. Unelected men bailing out huge corporations to benefit them. Corporatism at its finest. Hopefully the audit (brought up by Ron Paul and Alan Grayson) will push the idea forward that the institution is doing us no good. People should inspect this more and find that both parties are looking to monetize debt by the Fed and stay in the pockets of businesses; this central bank is what is keeping our economy in ruins for consumers and booming for rich businessmen. 

Citigroup Inc. (C) Chief Executive Officer Vikram Pandit, who took a $1 salary after his bank received the most taxpayer assistance of any U.S. lender, is poised to collect $80 million from other payments and awards that may eventually total more than $200 million.

Pandit, 54, will get the $80 million from Citigroup’s purchase of his Old Lane Partners LP hedge fund tomorrow, according to regulatory filings. The deal brought him to the lender in July 2007. JPMorgan Chase & Co. (JPM), which remained profitable through the financial crisis, has disclosed about $90 million in awards for CEO Jamie Dimon since 2007.

So working people get Medicare and Social Security cuts while the wealthy keep raking it in.