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Media outlets across the country trumpeted the stunning news with headlines like this: “Citigroup Punished.”
At last, went the storyline, the Justice Department brought down the hammer on one of the greedheaded Wall Street giants that’re guilty of massive mortgage frauds that crashed our economy six years ago. While millions of ordinary Americans lost homes, jobs, and businesses– and still haven’t recovered – the finagling bankers were promptly bailed out by Washington and continue to get multimillion-dollar bonuses. So, hitting Citigroup with $7 billion in penalties for its role in the calamitous scandal is a real blow for justice!
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Well, sort of. Actually… not so much. While seven billion bucks is more than a slap on the wrist, it pales in contrast to the egregious nature of Citigroup’s crime and the extent of the horrendous damage done by the bankers. In fact, when it announced the settlement, the Justice Department itself pointed out that Citigroup’s fraudulent acts “shattered lives.”
For most of us, paying billions is impossible to imagine, much less do. But this is a Wall Street colossus with $76 billion in revenue last year alone. It 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 was $45 billion – six times more than it is now having to pay back!
Even by Wall Street standards, pulling a 600 percent profit from grand larceny is a pretty sweet deal. One clear indicator that this “punishment” is way too light is that on the same day it was announced, jubilant Wall Street investors jacked up Citigroup’s stock price by 3.6 percent.
“Citi Settles Mortgage Securities Inquiry for $7 Billion,” The New York Times, July 15, 2014.
“Citigroup punished: $7 billion,” Austin American Statesman, July 15, 2014.
“Citi Profit Exceeds Forecasts,” www.nytimes.com, April 14, 2014.