It Takes a Pillage: An Epic Tale of Power, Deceit, and Untold Trillions

by Nomi Prins

  19 Data from Thomson Reuters/Freeman & Co., http://www.thomsonreuters.com.

  20 Cyrus Sanati, comment on “Merging Banks Surge Past U.S. Deposit Caps,” Dealbook, comment posted October 17, 2008, http://dealbook.blogs.nytimes.com/2008/10/17/merging-banks-surge-past-us-deposit-cap.

  21 Ari Levy and Elizabeth Hester, “JPMorgan Buys WaMu Deposits; Regulators Seize Thrift,” Bloomberg, September 26, 2008, http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=aWxliUXHsOoA.

  22 United States Federal Deposit Insurance Corporation, Federal Deposit Insurance Corporation Summary of Deposits: Deposits of FDIC Insured Commercial Banks and Savings Institutions as of June 30: 1999-2008, June 30, 2008, http://www2.fdic.gov/sod/pdf/ddep_2008.pdf.

  23 Monica Langley, Tearing Down the Walls: How Sandy Weill Fought His Way to the Top of the Financial World—and Then Nearly Lost It All (New York: Wall Street Journal Books, 2003), p. 288.

  24 Binyamin Appelbaum, “Citi’s Long History of Overreach, Then Rescue,” Washington Post, March 11, 2009.

  25 Langley, Tearing Down the Walls, p. 311.

  26 Chris Suellentrop, “Sandy Weill: How Citigroup’s CEO Rewrote the Rules so He Could Live Richly,” Slate.com, November 20, 2002, http://www.slate.com/id/2074372.

  27 Center for Responsive Politics, “Citigroup Inc. Client Profile: Summary, 1998,” Opensecrets.org, http://www.opensecrets.org/lobby/clientsum.php?lname=Citigroup+Inc&year=1998.

  28 Data from Thomson Reuters/Freeman & Co., http://www.thomsonreuters.com.

  29 Associated Press, “Travelers Group to Buy Salomon for $9.3 Billion,” The Journal Record (Oklahoma City), September 25, 1997, http://findarticles.com/p/articles/mi_qn4182/is_19970925/ai_n10112443.

  30 About Citi, “Our Brands,” Citigroup, http://www.citigroup.com/citi/business/brands.htm.

  31 Mitchell Martin, “Citicorp and Travelers Plan to Merge in Record $70 Billion Deal,” International Herald Tribune, April 7, 1998.

  32 Forbes.com staff, “Sanford Weill to Step Down as CEO at 70,” Forbes, July 16, 2003, http://www.forbes.com/2003/07/16/cx_ss_0716weillmini.html.

  33 United States Securities and Exchange Commission, “SEC Sues Citigroup Global Markets, Formerly Known as Salomon Smith Barney, and Former Research Analyst Jack B. Grubman for Research Analyst Conflicts of Interest,” press release, April 28, 2003, http://sec.gov/litigation/litreleases/lr18111.htm.

  34 Daniel Dunaief, “Watchdog Labels Citi Board the Worst,” New York Daily News, June 10, 2003.

  35 SeniorAdvisers,“SanfordI.Weill,”Citigroup,http://www.citigroup.com/citi/corporategovernance/profiles/weill/index.htm.

  36 Jonathan Stempel, “Sandy Weill to End Citigroup Consulting Job,” Reuters, January 29, 2009, http://www.reuters.com/article/regulatoryNewsFinancialServicesAnd-RealEstate/idUSN2929071720090129.

  37 Morgan Stanley, “Morgan Stanley and Citi to Form Industry Leading Wealth Management Business through Joint Venture,” press release, January 13, 2009, http://www.morganstanley.com/about/press/articles/af3e409a-e1b7 11dd 84e6 b390c77322d3.html.

  38 Eric Dash, “Buyers for a Citigroup Fire Sale Have Probably Been Singed, Too,” New York Times, January 14, 2009.

  39 Data from SGA Executive Tracker, http://www.sgaexecutivetracker.com/sga.html.

  40 Center for Responsive Politics, “Bank of America Client Profile: Summary, 1998,” Opensecrets.org, http://www.opensecrets.org/lobby/clientsum.php?year=1998&lname=Bank+of+America&id=.

  41 Center for Responsive Politics, “Bank of America Client Profile: Summary, 1999,” Opensecrets.org, http://www.opensecrets.org/lobby/clientsum.php?year=1999&lname=Bank+of+America&id=.

  42 Center for Responsive Politics, “Bank of America Client Profile: Summary, 2008,” Opensecrets.org, http://www.opensecrets.org/lobby/clientsum.php?year=2008&lname=Bank+of+America&id=.

  43 Data from Thomson Reuters/Freeman & Co., http://www.thomsonreuters.com.

  44 Data from the U.S. Executive Compensation Database, http://www.lexis.com.

  45 Bank of America, “Bank of America Buys Merrill Lynch Creating Unique Financial Services Firm,” Bank of America press release, http://newsroom.bankofamerica.com/index.php?s=43&item=8255.

  46 Heidi N. Moore, comment on “Bank of America-Merrill Lynch: A $50 Billion Deal From Hell,” Deal Journal, comment posted January 22, 2009, http://blogs.wsj.com/deals/2009/01/22/bank-of-america-merrill-lynch-a-50-billion-deal-from-hell.

  47 Data from Thomson Reuters/Freeman & Co., http://www.thomsonreuters.com.

  48 Dan Fitzpatrick, “Merrill Pay Scrutinized,” Wall Street Journal, March 17, 2009, http://online.wsj.com/article/SB123732310146161443.html.

  49 “Finger Interests Urges Bank of America Shareholders to Vote for Governance Changes,” Business Wire (posted on Forbes.com), March 13, 2009, http://www.reuters.com/article/pressRelease/idUS155292+13-Mar 2009+BW20090313.

  50 Dan Fitzpatrick and Marshall Eckblad, “Lewis Ousted as BofA Chairman,” Wall Street Journal, April 30, 2009.

  51 BankofAmerica,“GregCurlNamedChiefRiskOfficeratBankofAmerica,”pressrelease, June 4, 2009, http://newsroom.bankofamerica.com/index.php?s=43&item=8472.

  52 Louise Story and Eric Dash, “Bank of America Ousts Head of Risk Oversight,” New York Times, June 4, 2009.

  53 Members of the Board, “William B. Harrison, Jr.,” JPMorgan Chase & Co., http://www.jpmorganchase.com/cm/cs?pagename=Chase/Href&urlname=jpmc/about/governance/members/harrisonHarrison.

  54 Langley, Tearing Down the Walls, p. 50; Daniel Arnall and Charles Herman, “FDIC: WaMu the ‘Largest Bank Failure Ever,’ ” ABC News, September 25, 2008, http://abcnews.go.com/Business/Story?id=5889501&page=1.

  55 Langley, Tearing Down the Walls, pp. 71-72, 88.

  56 Ibid., p. 125.

  57 Ibid., p. 317.

  58 Data from Thomson Reuters/Freeman & Co., http://www.thomsonreuters.com.

  59 People, “James S. Dimon,” Forbes, http://people.forbes.com/profile/james-sdimon/46630.

  60 Data from the U.S. Executive Compensation Database, http://www.lexis.com.

  61 David Ellis and Tami Luhby, “JPMorgan Scoops up Troubled Bear,” CNN Money, March 17, 2008, http://money.cnn.com/2008/03/16/news/companies/jpmorgan_bear_stearns/index.htm.

  62 United States Federal Deposit Insurance Corporation, “JPMorgan Chase Acquires Banking Operations of Washington Mutual,” press release, September 25, 2008, http://www.fdic.gov/news/news/press/2008/pr08085.html.

  63 Nomi Prins and Krisztina Ugrin, “Bailout Tally,” June 2009, http://www.nomiprins.com/bailout.html.

  64 Matthew Leising and Elizabeth Hester, “JPMorgan Said to Reap $5 Billion Derivatives Profit,” Bloomberg, March 3, 2009, http://www.bloomberg.com/apps/news?pid=20601087&sid=a_v5DTUmYDbA&refer=home.

  65 Daniel Macht, “Finance: Dimon Lashes Out at Critics,” Crain’s New York Business, February 4, 2009, http://futurenyc.crainsnewyork.com/2009/02/04/finance-dimon-lashes-out-at-critics.

  66 Eric Dash, “Bankers Pledge Cooperation with Obama,” New York Times, March 27, 2009, http://dealbook.blogs.nytimes.com/2009/03/27/bankers-promise-cooperation-with-obama.

  67 Wells Fargo, “Wells Fargo, Wachovia Agree to Merge,” press release, October 3, 2008, https://www.wellsfargo.com/press/2008/20081003.

  68 McClatchy Tribune Information Services, “Citigroup Battle Fallout Continues: Wells Fargo: No Plans for Major Layoffs at Wachovia,” The Decatur Daily, October 12, 2008, http://www.tradingmarkets.com/.site/news/Stock%20News/1937180/?relatestories=1.

  69 David Enrich and Dan Fitzpatrick, “Wachovia Chooses Wells Fargo, Spurns Citi,” Wall Street Journal, October 4, 2008.

  70 Business Briefing, “Bonuses Reined in at Wells Fargo,” Los Angeles Times, February 28, 2009, http://articles.latimes.com/2009/feb/28/business/fi-briefs28; Compensation data from the U.S. Executive Compensation Database, http://www.lexis.com.

  71 Marshall Eckblad and Mike Barris, “Wells Fargo Cuts Its Dividend 85%,” Wall Street Journal, March 7, 2009, http://online.wsj.com/article/S
B123634454649952469.html.

  72 AIG, The AIG Story, “The AIG Financial Crisis: A Summary,” www.aig.com/OurCommitment_385_136429.html.

  73 Gretchen Morgenson, “Behind Insurer’s Crisis, Blind Eye to a Web of Risk,” New York Times, September 27, 2008.

  74 Michael Rapoport, Dow Jones Newswires, “Banks Protected again [sic] All risks in AIG Scandal,” The Australian, March 20, 2009, http://www.theaustralian.news.com.au/business/story/0,,25214458-5017996,00.html?from=marketwatch_rss.

  75 Liz Moyer, “Goldman on AIG: ‘Don’t Blame Us,’” Forbes, March 20, 2009, http://www.forbes.com/2009/03/20/goldman-sachs-aig-business-wall-street-goldman.html.

  76 United States Department of the Treasury, “Statement by Secretary Henry M. Paulson, Jr. on Comprehensive Approach to Market Developments,” press release, September 19, 2008, http://www.ustreas.gov/press/releases/hp1149.htm.

  77 Senate Committee on Banking, Housing and Urban Affairs, Board of Governors of the Federal Reserve System, Ben S. Bernanke Testimony: Turmoil in U.S. Credit Markets Recent Actions regarding Government Sponsored Entities, Investment Banks and Other Financial Institutions, 110th Cong., 2nd sess., 2008.

  78 Board of Governors of the Federal Reserve System, press release, September 16, 2008, http://federalreserve.gov/newsevents/press/other/20080916a.htm.

  79 John W. Schoen, “What Are ‘Diluted’ Shares?” MSNBC.com, http://www.msnbc.msn.com/id/7477469.

  80 Barry Meier and Mary Williams Walsh, “A.I.G. to Get Additional $37.8 Billion,” New York Times, October 8, 2008.

  81 Board of Governors of the Federal Reserve System, press release, October 8, 2008, http://www.federalreserve.gov/newsevents/press/other/20081008a.htm.

  82 AIG, “AIG Commercial Insurance,” October 24, 2008, http://web.aig.com/2008/cig8454/cig8454_AIGCIFactSheet_102408.pdf.

  83 Board of Governors of the Federal Reserve System, press release, November 10, 2008, http://federalreserve.gov/newsevents/press/other/20081110a.htm.

  84 Carol D. Leonnig, “Government Again Expands AIG Rescue Plan,” Washington Post, November 11, 2008.

  85 Transcripts, “American International Group, Inc. Q4 2008 Earnings Call Transcript,” Seekingalpha.com, March 3, 2009, http://seekingalpha.com/article/123915-american-international-group-inc-q4-2008-earnings-call-transcript.

  86 AIG, “Results Reflect Ongoing Severe Market Disruption and Restructuring Related Charges,” press release, March 2, 2009, http://ir.aigcorporate.com/phoenix.zhtml?c=76115&p=irol-newsArticle&ID=1261312&highlight=.

  87 AIG, “AIG Announces Chairman and CEO Edward M. Liddy to Step Down after Replacements Found,” press release, May 21, 2009, http://phx.corporateir.net/phoenix.zhtml?c=76115&p=irol-newsArticle&ID=1291293&highlight=.

  88 Nomi Prins and Krisztina Ugrin, “Bailout Tally,” June 2009, http://www.nomiprins.com/bailout.html; House Financial Services Committee, Board of Governors of the Federal Reserve System, Ben S. Bernanke Testimony: oversight of the Federal Government’s Intervention at American International Group, 111th Cong., 1st sess., 2009.

  89 “Top Watchdog,” The Economist, March 19, 2009.

  90 House Financial Services Committee, Board of Governors of the Federal Reserve System, Ben S. Bernanke Testimony: Oversight of the Federal Government’s Intervention at American International Group, 111th Cong., 1st sess., 2009.

  91 AIG, “Code of Conduct,” http://media.corporate-ir.net/media_files/irol/76/76115/AIGcoconduct.pdf.

  92 Carrick Mollenkamp, Serena Ng, Liam Pleven, and Randall Smith, “Behind AIG’s Fall, Risk Models Failed to Pass Real World Test,” Wall Street Journal, October 31, 2008.

  93 Transcripts, “American International Group Q2 2007 Earnings Call Transcript,” Seekingalpha.com, August 9, 2007, http://seekingalpha.com/article/44048-american-international-group-q2-2007-earnings-call-transcript?page=7.

  94 Michael Daly, “Pin AIG Woes on Brooklyn Boy: Joseph Cassano Walked Away with $315 Million While Company Staggered,” New York Daily News, March 17, 2009, http://www.nydailynews.com/money/2009/03/17/2009-03-17_pin_aig_woes_on_brooklyn_boy_joseph_cass-1.html.

  95 American International Group, “Attachment A—Collateral Postings under AIGFP CDS: Direct Support to AIG from 9/16/08-12/31/08,” http://www.aig.com/aigweb/internet/en/files/CounterpartyAttachments031809_tcm385-155645.pdf.

  96 Eliot Spitzer, “The Real AIG Scandal,” Slate.com, March 17, 2009, http://www.slate.com/id/2213942.

  97 Eliot Spitzer, “The Real AIG Scandal, Continued!” Slate.com, March 22, 2009, http://www.slate.com/id/2214407.

  Chapter 9. Change, Really?

  1 Michael Lewis, “The End,” Portfolio, December 2008, p. 1, http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The End of Wall Streets Boom.

  2 U.S. Department of the Treasury, 2007 Budget Receipts by Source, Table 2, October 11, 2007, http://www.treas.gov/press/releases/reports/additionaltable2.pdf.

  3 U.S. Department of the Treasury, “Opening Statement of Herbert M. Allison, Nominee for Assistant Secretary of the Treasury for Financial Stability before the Senate Committee on Banking, Housing, and Urban Affairs,” press release, TG 157, June 4, 2009, http://www.treas.gov/press/releases/tg157.htm.

  4 Reuters, “Fannie Mae CEO Takes over TARP,” CNNMoney.com, April 17, 2009, http://money.cnn.com/2009/04/17/news/economy/tarp_director.reut/index.htm; Washington Post Company, “Herbert M. Allison,” Who Runs Gov., n.d., http://www.whorunsgov.com/Profiles/Herbert_M._Allison_Jr.

  5 Zachary A. Goldfarb, “Treasury Plans to Tap Fannie Mae Chief to Run Bailout,” Washington Post, April 14, 2009, http://www.washingtonpost.com/wp-dyn/content/article/2009/04/13/AR2009041303257.html?hpid=topnews.

  6 Washington Post Company, “Herbert M. Allison Jr.”

  7 Teachers Insurance and Annuity Association—“College Retirement Equities Fund, Who We Are,” n.d., http://www.tiaa-cref.org/about/identity/index.html.

  8 Jenny Anderson, “A Financial Veteran Brings Wall Street and Washington to Job at Fannie Mae,” New York Times, September 7, 1008, http://www.nytimes.com/2008/09/08/us/08allison.html?_r=1.

  9 Patrick McGeehan, “Openers: Suits; New in the Neighborhood,” New York Times, May 7, 2006, http://query.nytimes.com/gst/fullpage.html?res=9E05E2DC1F3FF934A35756C0A9609C8B63.

  10 GovTrack.us, H.R. 1586: To Impose an Additional Tax on Bonuses Received From Certain TARP Recipients, n.d., http://www.govtrack.us/congress/bill.xpd?bill=h111-1586.

  11 Jeff Mason, “UPDATE 1—Obama Says Needs ‘Ammunition’ for Financial System,” Reuters, January 13, 2009, http://in.reuters.com/article/governmentFilingsNews/idINN1235014120090112.

  12 Nomi Prins and Krisztina Ugrin, “TARP Evaluation,” June 2009, http://www.nomiprins.com/bailout.html.

  13 U.S. Department of the Treasury, “Treasury Announces New Policy to Increase Transparency in Financial Stability Program,” press release: TG 04, January 28, 2009, http://treas.gov/press/releases/tg04.htm.

  14 U.S. Department of the Treasury, “Secretary Geithner Introduces Financial Stability Plan,” press release: TG 18, February 10, 2009, http://www.treasury.gov/press/releases/tg18.htm.

  15 Federal Deposit Insurance Corporation, FDIC Quarterly, vol. 3, no. 1 (2009), http://www.fdic.gov/bank/analytical/quarterly/2009_vol3_1/Quarterly_Vol3No1_entire_issue_FINAL.pdf.

  16 U.S. Department of the Treasury, “Secretary Geithner Introduces Financial Stability Plan.”

  17 Ibid.

  18 Fredreka Schouten, “Geithner Names Ex-Lobbyist as Treasury Chief of Staff,” USA Today, January 27, 2009, http://www.usatoday.com/news/washington/2009-01-27-lobbyist_N.htm; Nomi Prins and Krisztina Ugrin, “Bailout Tally,” June 2009, http://www.nomiprins.com/bailout.html.

  19 The White House, Executive Order—Ethics Commitments by Executive Branch Personnel, January 21, 2009, http://www.whitehouse.gov/the_press_office/ExecutiveOrder-EthicsCommitments.

  20 U.S. Department of the Treasury, “Secretary Tim Geithner Opening Statement—Senate Budget Committee Hearing Policies to
Address the Crises in Financial and Housing Markets,” press release: TG-02112009, February 11, 2009, http://www.treas.gov/press/releases/tg02112009.htm.

  21 U.S. Department of the Treasury, “Treasury Secretary Tim Geithner Written Testimony, Congressional Oversight Panel,” press release: TG 94, April 21, 2009, http://www.treas.gov/press/releases/tg94.htm.

  22 United States Department of Labor, “Employment Situation Summary,” press release, June 5, 2009, http://www.bls.gov/news.release/empsit.nr0.htm.

  23 U.S. Department of the Treasury, “Secretary Geithner Introduces Financial Stability Plan.”