Yesterday CNBC reported that Citigroup is one of the banks selected by the Small Business Administration to handle billions of dollars earmarked in last week’s stimulus bill to help small businesses get back on their feet and keep their employees paid during the coronavirus crisis. Citigroup’s Citicorp subsidiary was charged with, and pleaded guilty to, a criminal felony count brought by the U.S. Department of Justice on May 20, 2015 for its role in rigging foreign currency trading. Its rap sheet for a long series of abuses to its customers and investors since 2008 is nothing short of breathtaking. (See its rap sheet at the end of this article.)
During the financial crash of 2007 to 2010, Citigroup received the largest bailout in global banking history after its former top executives had walked away with hundreds of millions of dollars that they cashed out of stock options. Citigroup received over $2.5 trillion in secret Federal Reserve loans; $45 billion in capital infusions from the U.S. Treasury; a government guarantee of over $300 billion on its dubious “assets”; a government guarantee of $5.75 billion on its senior unsecured debt and $26 billion on its commercial paper and interbank deposits by the Federal Deposit Insurance Corporation.
Sandy Weill was the Chairman and CEO of Citigroup as it built up its toxic footprint and off-balance-sheet vehicles that blew up the bank. Weill was also the man who engineered the repeal of the Glass-Steagall Act, the depression-era legislation that had safeguarded the U.S. banking system for 66 years before its repeal in 1999. Weill needed the Glass-Steagall legislation to vanish so that he could merge his hodgepodge of Wall Street trading firms (Salomon Brothers and Smith Barney, et al) with a federally-insured bank full of deposits. Weill told his merger partner, John Reed of Citibank, that his motivation for the deal was: “We could be so rich,” according to Reed in an interview with Bill Moyers.
The repeal of Glass-Steagall meant that the casino-style investment banks and trading houses across Wall Street could now own federally-insured commercial banks and use those mom and pop deposits in a heads we win, tails you lose strategy. Every major Wall Street trading house either bought a federally-insured bank or created one. (See the co-author of this article testifying before the Federal Reserve on June 26, 1998 against the Citigroup merger and the repeal of the Glass-Steagall Act in this video.)