That penalty is too light to deter future finagling.
When Citigroup accepted what the media hailed as a whopping $7 billion penalty for defrauding its own investors and wrecking our economy, the bank just shrugged.
“We believe that this settlement is in the best interest of our shareholders and allows us to move forward and to focus on the future,” Citi CEO Michael Corbat said.
Note the lack of any regret, apology, or shame. And the total absence of any pledge that the bankers won’t do it again.
So much for a $7 billion penalty being a deterrent to Wall Street finagling.
One reason Corbat could be so blasé is that our Justice Department’s prosecutors filed no criminal charges against Citigroup for its transgressions — not against the bank itself, nor against any of the bankers who plotted, executed, and profited from doing their share to create the mortgage and financial crises.
There’s certainly plenty of evidence of criminal fraud: In one internal email, a Citigroup trader essentially admitted that the packaged loans the bank sold investors as solid, were crap: “We should start praying,” he wrote to his higher ups. “I would not be surprised if half of these loans went down.”
While more than a slap on the wrist, $7 billion doesn’t compensate for the horrendous damage done by the bankers. While announcing the settlement, Attorney General Eric Holder himself pointed out that Citigroup’s fraudulent acts “shattered lives.”
Yet this Wall Street colossus rakes in enough profit in six months to more than cover this “punishment.”
Also, the bank will get to deduct 40 percent of the penalty from its income tax. Then there’s this little number that the prosecutors failed to mention when they announced the settlement: Citigroup’s taxpayer bailout in 2008 totaled $45 billion — more than six times greater than this settlement.
Do you need more evidence that this “punishment” is way too light? Citigroup’s stock gained 3.6 percent the day Holder announced the penalty.
OtherWords columnist Jim Hightower is a radio commentator, writer, and public speaker. He’s also editor of the populist newsletter, The Hightower Lowdown. OtherWords.org.