'PONZI SCHEME' AT CITI; SUIT SLAMS RUBIN

[Demeter]

http://www.nypost.com/seven/12042008/business/ponzi_scheme_at_citi_142511.htm

By PAUL THARP


A new Citigroup scandal is engulfing Robert Rubin and his former disciple Chuck Prince for their roles in an alleged Ponzi-style scheme that's now choking world banking.

Director Rubin and ousted CEO Prince - and their lieutenants over the past five years - are named in a federal lawsuit for an alleged complex cover-up of toxic securities that spread across the globe, wiping out trillions of dollars in their destructive paths.

Investor-plaintiffs in the suit accuse Citi management of overseeing the repackaging of unmarketable collateralized debt obligations (CDOs) that no one wanted - and then reselling them to Citi and hiding the poisonous exposure off the books in shell entities.

The lawsuit said that when the bottom fell out of the shaky assets in the past year, Citi's stock collapsed, wiping out more than $122 billion of shareholder value.

However, Rubin and other top insiders were able to keep Citi shares afloat until they could cash out more than $150 million for themselves in "suspicious" stock sales "calculated to maximize the personal benefits from undisclosed inside information," the lawsuit said.

The latest troubles for Rubin, Prince and others emerged in a 500-page investigation by Citigroup investors represented by law firm Kirby McInerney.

The probe was used to amend and add new details to a blanket investor lawsuit filed against Citigroup a year ago. The amended suit called the actions of Citi leaders "a quasi-Ponzi scheme" to hide troubles - and keep Citi stock afloat while insiders unloaded about 3 million shares between Jan. 1, 2004 and Feb. 22, 2008 for huge profits.

In addition to Citigroup, Rubin and Prince, the complaint names Vice Chairman Lewis Kaden, ex-CFO Sallie Krawcheck and her successor CFO Gary Crittenden.

Rubin cleared $30.6 million on his stock sales, while Prince got $26.5 million, former COO Robert Druskin got nearly $32 million and former Global Wealth Management unit chief Todd Thomson got $25.7 million, the suit said.

Citi denied the allegations and said it "will defend against it vigorously."

[JuniperLea]

1. So, when do heads start rolling?

This is getting out of control. I'm sure we know but the tip of this disgusting iceberg.

[tblue37]

8. Well, Rubin's head seems to be rolling right to a position where he will

be an economic advisor to Obama.

[stillcool]

2. an interesting history of Citi..

http://www.euromoney.com/Article/1694974/Title.html

[GodlessBiker]

3. I have a friend who works for Citi. He's just counting the days till he is canned.

It's not good over there.

[girl gone mad]

4. Obama should withdraw Geithner's nomination.

Let him blame it on Republican opposition over the tax cheating.

[jazzjunkysue]

7. Agreed. This is ugly.

I don't think I'll ever trust an investor in my life. I never have, yet, and every day I'm finding out why.

No wonder the financial people support Bush: Liars will always back other liars.

[bvar22]

5. !

On both Wall Street and in Congress, the same old crooks and party hacks who succeeded in producing the greatest economic crisis since the Great Depression have now ended up with even more power and more control than they had before the election.

<snip>

Similarly, delivering the exact opposite of "change," President-elect Barack Obama is putting some of the nation's most notorious foxes in charge of guarding the chicken coop by way of a proposed economic team that Jackie Calmes, The New York Times correspondent on national economic policy, calls "a virtual Rubin constellation."

Obama's "choices for his top economic advisers -- Timothy F. Geithner as Treasury secretary, Lawrence H. Summers as senior White House economics adviser and Peter R. Orszag as budget director -- are past proteges of (former Treasury Secretary Robert) Rubin," explains Calmes, formerly the chief political correspondent for The Wall Street Journal's Washington bureau.

<more>
http://www.pittsburghlive.com/x/pittsburghtrib/opinion/columnists/reiland/s_604650.html

More "Rubinomics" anyone?


"There are forces within the Democratic Party who want us to sound like kinder, gentler Republicans. I want us to compete for that great mass of voters that want a party that will stand up for working Americans, family farmers, and people who haven't felt the benefits of the economic upturn."---Paul Wellstone

[bemildred]

6. Obama is going to have to decide if he wants to be Hoover or Roosevelt.. nt

[mod mom]

9. Jan. 31 article in Fortune headlined "Robert Rubin: What meltdown?"

Rubin, who pocketed tens of millions running Goldman Sachs before becoming treasury secretary, is the man who got President Clinton to back legislation by then-Sen. Phil Gramm, R-Texas, to unleash banking greed on an unprecedented scale. What followed, thanks to a rare display of bipartisan teamwork, was a total dismantling of the regulatory regime that President Franklin D. Roosevelt had put in place during the New Deal, thus undermining the finest legacy of the Democratic Party. Under the guidance of Rubin and Summers, Clinton signed off on the Gramm-Leach-Bliley Act and the Commodity Futures Modernization Act, Gramm's two key pieces of legislation, during his final two years in the White House.

The first beneficiary of that legislation was Citigroup, which was allowed to merge with Travelers Insurance, where Rubin became a director after leaving the government. In his position on the executive committee of a floundering Citigroup, Rubin insisted as late as January of this year that a serious crisis was not forming. In a Jan. 31 article in Fortune headlined "Robert Rubin: What meltdown?" the subheading states: "In a talk on Wednesday , the Citigroup director said the current financial upheaval is just cyclical. And none of the blame that there was to assign went to Wall Street." The writer of the article, Katie Benner, quoted Rubin as saying that the problems were "all part of a cycle of periodic excess leading to periodic disruption," neatly exonerating his own bank of any responsibility, even though Citigroup had already written down over $24 billion in bad mortgage losses.

At that time, Rubin was advising Hillary Rodham Clinton, while Obama, listening to Volcker, took the opposite tack, issuing a warning in a major address two months after Rubin's talk that the United States was experiencing the most profound economic crisis since the Great Depression. Obama specifically cited the legislation that Rubin had supported and cautioned, "Our free market was never meant to be a free license to take whatever you can get, however you can get it."

-snip

http://www.huffingtonpost.com/robert-scheer/the-battle-for-obamas-eco_b_136757.html

[Soylent Brice]

10. that coupled with this:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=4827598&mesg_id=4827598

citi is ringing in the new year with a bang.