Remember Richard Bowen?
He is the former senior executive at Citigroup Inc. (C) who in November 2007 issued a clarion call to his colleagues and Citi’s board that a major credit-quality problem loomed for the bank.
Bowen was the chief underwriter in the business unit that bought some $50 billion annually in home mortgages from third parties that were then bundled up and sold as securities to investors the world over. On Nov. 3 he sent an “urgent” e-mail to executives including Robert Rubin, the former U.S. Treasury secretary who was then chairman of the bank’s executive committee, and Gary Crittenden, the chief financial officer, raising concerns about “breakdowns in internal controls and resulting significant but possibly unrecognized financial losses existing within our organization.”
Bowen wrote that he had been “agonizing for some time” about the problem, especially since his direct superiors at the bank, whom he had warned repeatedly since he first discovered the problem in mid-2006, had done little or nothing to remedy it. What he had discovered was that 60 percent of the home mortgages that Citigroup had bought from third parties, or $30 billion, were “defective,” meaning that they didn’t meet Citigroup’s underwriting criteria. Nevertheless, they were still packaged up -- defects and all -- and sold as securities.
Read more: http://www.bloomberg.com/news/2012-10-28/why-does-the-sec-protect-banks-dirty-secrets-.html?alcmpid=view
He is the former senior executive at Citigroup Inc. (C) who in November 2007 issued a clarion call to his colleagues and Citi’s board that a major credit-quality problem loomed for the bank.
Bowen was the chief underwriter in the business unit that bought some $50 billion annually in home mortgages from third parties that were then bundled up and sold as securities to investors the world over. On Nov. 3 he sent an “urgent” e-mail to executives including Robert Rubin, the former U.S. Treasury secretary who was then chairman of the bank’s executive committee, and Gary Crittenden, the chief financial officer, raising concerns about “breakdowns in internal controls and resulting significant but possibly unrecognized financial losses existing within our organization.”
Bowen wrote that he had been “agonizing for some time” about the problem, especially since his direct superiors at the bank, whom he had warned repeatedly since he first discovered the problem in mid-2006, had done little or nothing to remedy it. What he had discovered was that 60 percent of the home mortgages that Citigroup had bought from third parties, or $30 billion, were “defective,” meaning that they didn’t meet Citigroup’s underwriting criteria. Nevertheless, they were still packaged up -- defects and all -- and sold as securities.
Read more: http://www.bloomberg.com/news/2012-10-28/why-does-the-sec-protect-banks-dirty-secrets-.html?alcmpid=view
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