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Breaking:Citi-Group About To Release Enron Like Problem
FOX,CNBC | 7-22-02 | my favorite headache

Posted on 07/22/2002 11:39:57 AM PDT by My Favorite Headache

Radio and I just see FOX reporting this. Big lender to worldcom and other giants...in trouble.Markets now back to falling...here we go.


TOPICS: Breaking News; Crime/Corruption; News/Current Events
KEYWORDS: citigroup; enron; robertrubin; worldcom
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1 posted on 07/22/2002 11:39:57 AM PDT by My Favorite Headache
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To: My Favorite Headache
Dominos
2 posted on 07/22/2002 11:41:13 AM PDT by RightWhale
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To: RightWhale
Dominos

Don't forget the Cinna-sticks!

3 posted on 07/22/2002 11:42:05 AM PDT by Petronski
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To: My Favorite Headache
Citigroup Deals Helped Enron Disguise Its Debts as Trades
Mon Jul 22, 2:01 AM ET

Citigroup Inc. (NYSE: C - News) arranged an unusual financing technique for Enron Corp. ( ENRNQ) that enabled the energy trader to appear rich in cash rather than saddled with debt, Monday's Wall Street Journal reported, citing internal documents of both companies.

Related Quotes
C
ENE
ENRNQ.NASDAQ.PK
JPM
DJIA
NASDAQ
^SPC
33.14
N/A
N/A
24.90
7890.84
1290.84
828.12
-2.86
N/A
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-1.20
-128.42
-28.31
-19.64

delayed 20 mins - disclaimer
Quote Data provided by Reuters

Details of the controversial arrangement are only now coming to light as Congress turns to probing the role played by Enron's banks in enabling its illusory growth.

In a series of deals known as Yosemite, the documents show, Citigroup's complex scheme helped Enron borrow money over the past three years that was booked as coming from trades instead of loans. The deals, involving bond offerings and trades with an offshore entity, helped boost the company's weak cash flow to match its growth in paper profits, at a time when the gap between the two had grown to as much as $1 billion a year, according to one Enron memo.

Investigators want to determine whether Enron would have been able to defraud investors if not for the willing participation of Wall Street. The documents amount to the most in-depth evidence yet of the extent to which Citigroup, the nation's largest financial institution, helped Enron disguise debt on its balance sheet through some of the most complex financial accounting arrangements at the Houston energy company.

Although Citigroup's actions technically may have been in accordance with accounting principles, they raise questions over whether Citigroup helped shield important information from Enron investors. Citigroup says it has done nothing wrong, noting that lenders shouldn't be held responsible for how a client such as Enron accounted for the financing arranged by its bankers. Citigroup said in a statement, "The transactions we entered into with Enron were entirely appropriate at the time based on what we knew and what we were told by Enron. We were assured that Enron's auditors had approved them, and we believed they were consistent with accounting rules in place at the time." Enron officials did not return calls seeking comment.

The deals will be scrutinized in new detail as part of hearings the Senate's Permanent Subcommittee on Investigations will launch Tuesday, examining to what extent Enron's banks helped disguise the true nature of its finances until its spectacular flameout and filing for bankruptcy protection last December.

"It has become common knowledge that Enron engaged in accounting deceptions to convince lenders, investors and analysts that the company was in better financial shape than it was," said Senator Carl Levin, the Michigan Democrat who will act as co -chairman of the hearings. "The question the Subcommittee will examine is the extent to which major financial institutions knew of and aided Enron's accounting deceptions."

Citigroup rival J.P. Morgan (NYSE: JPM - News) Chase & Co . also will face scrutiny in the hearings this week for similar deals through a vehicle known as Mahonia, which was the subject of a page one story in The Wall Street Journal in January. Mahonia has drawn wide scrutiny following a lawsuit with insurers who guaranteed the transactions through surety bonds. The insurers refuse to pay Morgan, arguing that prepaid transactions effectively generated loans, not trades. Their viewpoint struck a chord with the judge overseeing the case, U.S. District Judge Jed S. Rakoff, who said in a March opinion that the Mahonia transactions "now appear to be nothing but a disguised loan."

The Securities and Exchange Commission ( news - web sites) is investigating both Citigroup and J.P. Morgan over whether the banks helped Enron hide debt and artificially boost cash flow, and the office of Manhattan District Attorney Robert Morgenthau also has been examining the deals, people familiar with the matter say. A spokesman for J.P. Morgan said the company believes "the prepaid transactions were properly accounted for by our firm and Enron."

Wall Street Journal Staff Reporters Jathon Sapsford and Paul Beckett contributed to this report.

4 posted on 07/22/2002 11:42:16 AM PDT by RCW2001
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To: My Favorite Headache
This isn't the same Citi-Group that employ's Robert Rubin as Vice Chair is it? How could he be in charge of something sleazy?
5 posted on 07/22/2002 11:42:49 AM PDT by The Vast Right Wing
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To: My Favorite Headache
I'm not surprised. They've wasted at least a million dollars on printing & postage for the ridiculous number of credit-card offers they send me.
6 posted on 07/22/2002 11:43:04 AM PDT by Sloth
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To: RCW2001
The deals, involving bond offerings and trades with an offshore entity, helped boost the company's weak cash flow to match its growth in paper profits, at a time when the gap between the two had grown to as much as $1 billion a year, according to one Enron memo.

Isn't that called "money laundering?"

7 posted on 07/22/2002 11:44:13 AM PDT by Petronski
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To: RCW2001
yippe! Can I default on my Visa now? Disguise it as a creative revenue enhancement synergistic loss.
8 posted on 07/22/2002 11:44:47 AM PDT by CJ Wolf
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To: Sloth
If I am not mistaken, Citigroup is compensating Rubin almost $1 million per week. Someone please correct me if I am wrong.
9 posted on 07/22/2002 11:44:55 AM PDT by mwl1
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To: RCW2001
Citigroup

Paging Mr. Lieberman, Paging Mr. Lieberman, the ethic committee would like to speak to you.

10 posted on 07/22/2002 11:45:55 AM PDT by mware
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To: mwl1
There's no way in hell that Rubin Sandwich is getting $52 million/year. I'd believe $1 million/month, though.
11 posted on 07/22/2002 11:46:24 AM PDT by steveegg
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To: steveegg
No, I'm pretty sure it's $700,000 per week.
12 posted on 07/22/2002 11:47:30 AM PDT by mwl1
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To: mwl1
Now we know why Rubin was calling people at treasury to "get the ratings agencies to ease up" about a week before enron went belly-up.
13 posted on 07/22/2002 11:47:32 AM PDT by The Vast Right Wing
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To: My Favorite Headache
Here we go. Another domino to Dow 3000 (and this is a big one).
14 posted on 07/22/2002 11:48:08 AM PDT by steveegg
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To: CJ Wolf
Dang it! I know I should have gotten a CitiBank Visa.
15 posted on 07/22/2002 11:48:56 AM PDT by Desdemona
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To: mware; Liz; d14truth; Howlin
Hi Martha!

Guys it looks like Robert Rubin just got Enroned!!!!!!

16 posted on 07/22/2002 11:49:46 AM PDT by Dog
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To: The Vast Right Wing
Another interesting Citigroup 'factoid'...

Saudi prince pours another dlrs 500 million into Citigroup
Thu Jul 18, 3:37 PM ET

NEW YORK - Prince Alwaleed Bin Talal, nephew of Saudi Arabia's King Fahd, has invested an additional dlrs 500 million in Citigroup Inc., the prince said Thursday.

Alwaleed, Citigroup's largest shareholder since 1991, said after the Sept. 11 terrorist attacks that he would invest about dlrs 1 billion in slumping U.S. and European shares.

The billionaire investor, who ranks 11th on Forbes's list of the richest people in the world, also has stakes in AOL Time Warner Inc. and Priceline.com Inc.

The latest investment by Alwaleed brings his total investment in Citigroup to more than dlrs 10 billion, or about 4 percent of the company.

Alwaleed said Thursday that Citigroup's shares were "at too attractive a price," prompting him to boost his investment in the New York-based financial-services giant.

Citigroup's shares dropped as low as dlrs 34.51 after the Sept. 11 attacks and recently traded only slightly above that level, at dlrs 37.52, down from the 52-week high of dlrs 52.50 set Jan. 7.

Wednesday, Citigroup reported a 15 percent rise in second-quarter earnings, boosted by growth in consumer credit-card, retail-banking and consumer-finance businesses.

Alwaleed, the 44-year-old chairman of Kingdom Holding Co., made headlines after the Sept. 11 attacks when he handed a dlrs 10 million check to New York City Mayor Rudy Giuliani following a visit to the site of the World Trade Center.

However, the Saudi prince also suggested that the United States take a more balanced approach toward the Palestinian cause, and Giuliani returned the check.

In afternoon trading, shares of Citigroup changed hands at dlrs 37.74, up 81 cents, or 2.2 percent, on the New York Stock Exchange ( news - web sites

17 posted on 07/22/2002 11:50:02 AM PDT by RCW2001
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To: My Favorite Headache
Fasten your seat belts everybody, we are at the top of the next lift-hill!
18 posted on 07/22/2002 11:50:14 AM PDT by mhking
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To: mwl1
Rubin's pay, which includes, yes, options, is deep into the 10s of millions/year.
19 posted on 07/22/2002 11:50:35 AM PDT by NativeNewYorker
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To: Desdemona
Huh???

I have Citibank Visa.....oh no!

20 posted on 07/22/2002 11:50:36 AM PDT by Dog
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To: My Favorite Headache
I want the Feds to look at two companies: The Soros Group and Goldman Sachs.

Given both George Soros and the Goldman Sachs firm are buddy-buddies with the Clinton crowd, you wonder did they engage in fraudulent activity like the Clintons did. We know that it was Soros through his Quantum Fund that caused the Asian economic crisis of 1998-1999 due to manipulation of currency trades.

21 posted on 07/22/2002 11:51:05 AM PDT by RayChuang88
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To: RCW2001
Now where do I remember Alwaleed from? Could it have been his support for the PLO or Al-Qaida?
22 posted on 07/22/2002 11:51:36 AM PDT by steveegg
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To: The Vast Right Wing
This isn't the same Citi-Group that employ's Robert Rubin as Vice Chair is it?

Time to flush, and expose these creeps. As one Freeper said.. its the "is, is" factor. All the things they are trying to bring up regarding VP Cheney and President Bush, are nothing but smoke screens because August the 14th is drawing near. They will let all this stuff out now, hoping the public will ignore or forget it.

A great article posted on FR today isn't getting much attention,.. but it should be. Read this!!

http://www.freerepublic.com/focus/news/720393/posts

23 posted on 07/22/2002 11:51:39 AM PDT by Vets_Husband_and_Wife
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To: RCW2001
The Prince is averaging down. A classic mistake of investing novices.
24 posted on 07/22/2002 11:52:06 AM PDT by NativeNewYorker
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To: The Vast Right Wing; Fracas
Yep that would be the same Citi Group Rubin works for

If I recall he was pusing for loans for Enron also

Worked for Goldman Sacks if memory serves me correct

Hmmmm ... the history that follows Rubin
25 posted on 07/22/2002 11:52:30 AM PDT by Mo1
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To: NativeNewYorker
Thanks for the info on Rubin's compensation. My recollection is that it exceeds $30 million per year.
26 posted on 07/22/2002 11:53:16 AM PDT by mwl1
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To: Dog
Hi Jim,

I think that Joe Lieberman is in real tight with this group too.

27 posted on 07/22/2002 11:53:54 AM PDT by mware
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To: My Favorite Headache
Citigroup Deal Helped Enron to Hide Its Debts

Robert E. Rubin is a Director, a Member of the Office of the Chairman of Citigroup Inc., and a member of the Citigroup Management Committee. He has been involved with financial markets and our nation's public policy debate all his professional life.

Mr. Rubin joined Citigroup on October 26, 1999, where he participates in the strategic, managerial and operational matters of the company. He also serves as a member of the Board of Directors of the Ford Motor Company. In March 2000, he became a member of the Advisory Board of Insight Capital Partners, a New York-based private-equity investment firm that specializes in e-commerce business-to-business companies.

______________________________

To Regain Confidence

By Robert E. Rubin
Sunday, July 21, 2002; Page B07

In my view, we need to restore the sound, broad-based strategy that was so central to the prosperity of the '90s. More specifically, I would focus especially on the following:

More... Robert Rubin speaks

___________________

28 posted on 07/22/2002 11:54:23 AM PDT by kcvl
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To: mware
It's time to start prosecuting certain RATs for willful fraud.
29 posted on 07/22/2002 11:54:57 AM PDT by steveegg
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To: The Vast Right Wing
No way that a Clintonite and LIEberman has ANYTHING to do with this. < /sarcasm >
30 posted on 07/22/2002 11:55:40 AM PDT by Quicksilver
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To: mwl1
Maybe, but he is obviously in the "Too rich to go to jail" catagory.
31 posted on 07/22/2002 11:57:25 AM PDT by Blood of Tyrants
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To: steveegg
Many former Clinton administration officials have cashed in on their Washington connections to make a killing in the corporate world, including former Treasury Secretary Robert Rubin. The ex-cabinet officer earned $21 million in 1999 from Citigroup. The company came into existence due to legislation that Rubin helped push through Congress while serving under Clinton.
32 posted on 07/22/2002 11:57:50 AM PDT by kcvl
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To: My Favorite Headache
Let the Congressional finger-pointing commence!!!
33 posted on 07/22/2002 11:58:19 AM PDT by TheGrimReaper
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To: My Favorite Headache
It's the end of the world as we know it.........and I feel fine, I feel fine.........
34 posted on 07/22/2002 11:59:02 AM PDT by marshmallow
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To: NativeNewYorker
Are Rubin's options any good now?
35 posted on 07/22/2002 11:59:04 AM PDT by aristeides
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To: My Favorite Headache
Isn't this ironic? It's not the Islamic terrorists that are taking this country down. It's the corporate elite...and the politicians they sleep with. I wonder if history will record this story correctly???
36 posted on 07/22/2002 11:59:05 AM PDT by hove
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To: RCW2001
The billionaire investor, who ranks 11th 12th 13th 14th 15th 16th 17th on Forbes's list of the richest people in the world,
37 posted on 07/22/2002 11:59:13 AM PDT by Blood of Tyrants
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To: kcvl
Makes me more and more convinced that the third part of the 2000-2002 stock collapse is entirely the fault of the RATs (I'll give normal market conditions the first part, and 9/11 the second).
38 posted on 07/22/2002 11:59:13 AM PDT by steveegg
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To: Dog
Holy crap.....
39 posted on 07/22/2002 11:59:23 AM PDT by b4its2late
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To: RCW2001
Alwaleed, Citigroup's largest shareholder since 1991... also has stakes in AOL Time Warner Inc. and Priceline.com Inc.

Boy, can this guy pick 'em, or what?

40 posted on 07/22/2002 12:00:28 PM PDT by Sloth
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To: marshmallow; Willie Green
Great tune.

And I wonder, still I wonder, who'll stop the rain.

41 posted on 07/22/2002 12:00:37 PM PDT by steveegg
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To: Sloth
Does Awaleed's stake in AOL Time Warner explain CNN's Middle East reporting?
42 posted on 07/22/2002 12:01:38 PM PDT by aristeides
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To: aristeides
Assuming the options fit the formula of having to use then-current prices as a "strike", his calls are waaaaaaaay out of the money.
43 posted on 07/22/2002 12:01:54 PM PDT by NativeNewYorker
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To: The Vast Right Wing
Robert E. Rubin - (From: Citigroup's website)
Director
Member, Office of the Chairman

 
Robert E. Rubin
44 posted on 07/22/2002 12:02:44 PM PDT by Oldeconomybuyer
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To: CJ Wolf
*snicker*

I have a CitiBank MasterCard. I wonder if that means they'll be knocking on my door to collect EVERYTHING I owe them.

45 posted on 07/22/2002 12:02:47 PM PDT by Malacoda
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To: My Favorite Headache
When contacted by Fox News channel
Senator Loserman was not available for comment


46 posted on 07/22/2002 12:02:53 PM PDT by McGruff
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To: aristeides
Does Awaleed's stake in AOL Time Warner explain CNN's Middle East reporting?

No; that's a legacy of Ted Turner.

47 posted on 07/22/2002 12:03:58 PM PDT by steveegg
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To: b4its2late
I heard earlier Enron hid a $5 Billion Loan from Citigroup as an energy deal....
48 posted on 07/22/2002 12:04:02 PM PDT by Dog
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To: My Favorite Headache

April 9, 2002

 Enron lawsuit portrays Rubin pushing bailout
By Patrice Hill
THE WASHINGTON TIMES

     Robert E. Rubin, the former Treasury secretary and current vice chairman of Citigroup Inc., is portrayed in the latest Enron lawsuit as trying to protect the bank's extensive investments in Enron Corp. by orchestrating a bailout for the energy giant in the fall.  CONTINUE

49 posted on 07/22/2002 12:04:07 PM PDT by Oldeconomybuyer
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To: RCW2001
". . .disguised debt . . . through . . . complex financial accounting . . ."

Hmmmm, reminds me of Whiteater, where close friends and business associates of George Bush, er, I mean Bill Clinton, used complex financial transactions to disguise their financial insolvency. And if I recall, the lawyer who drew up some of those bogus deals was none other than Dick Cheney, er, I mean Hillary Clinton.
50 posted on 07/22/2002 12:04:38 PM PDT by Steve_Seattle
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