[TLBSHOW]

How the Clinton Treasury Caused the Current Stock Market Fall (Intermingling of Businesses)



In 1998, Travelers CEO Sandy Weill and Citicorp head John Reed announced plans to merge their two financial powerhouses. There was one problem: U.S. law prohibited the merger of commercial banks with insurance companies and securities firms. The two companies were not deterred. A loophole in the law barring such combinations gave the two companies a two-year window before the merger ban would kick in. That would be plenty of time, they figured, to change a centerpiece of U.S. banking laws that had stood in place for more than 50 years.
There already was momentum in Congress in support of the financial deregulation that proponents supported under the misleading banner of “financial modernization.” But there were also major legislative blocks and hurdles, and no assurance of passage.

Enter Citigroup. Though Citicorp has opposed the deregulation bill, the merged Citigroup became its most important advocate, with Sandy Weill pitching a tent in the halls of Congress to lobby legislators.

Still, the bill remained mired in Congress, thanks to jurisdictional disputes among federal agencies, intra-industry conflicts and consumer group opposition.

Former Clinton Treasury Secretary Robert Rubin sealed the deal. After having left his Treasury Department post, but amidst negotiating his new terms of employment as chair of the management committee at Citicorp, Rubin brokered the final compromise to ensure passage of the financial deregulation bill.

While Citi’s top priority was an after-the-fact legalization of the tainted Citicorp-Travelers merger, much more was at stake — for both the financial industry and consumers. The bill has enabled not just this particular corporate combination, but the intermingling of businesses that were formerly, properly and prudentially, kept apart.

http://multinationalmonitor.org/mm2002/02april/april02editorial.html

[Mike Darancette]

Citicorp --- Big DemocRAT donors, I home the DNC and other Dems give ALL their CITIGROUP donations back.

[jackbill]

Curious. Not one mention of Robert Rubin in this article and not one mention of the phone calls that he made to the Treasury Department, trying to get them to go easy on Enron's credit rating.

I wonder why?

[MJY1288]

I find it interesting that the NYT's didn't mention Robert Rubin in this article

[hobbes1]

Wait, I watch the News EVERYDAY, and I am telling you

THERE WAS NO CORPORATE MALFEASENCE BEFORE 1/20/2001!!!!!!

/Sarcasm.

[Dog Gone]

The market doesn't like this news.

[Puddleglum]

This news doesn't suprise me one bit, and I predict that many more banks are to follow. Banks by nature are always looking for some new, high-return investment to improve their own bottom line. It's their business to take money and grow it, and I suspect that this may have gotten some of them to get their hands dirty in order to maximize their own profits. I think it will only be the magnitude and pervasiveness of the unethical behavior that might be a shock.

Remember speculative oil market, bust, and bank failures of the 1980's? Well, this may be the start of "Funny Money," round two. It all depends on where the buck stops, how many people were willing to put on blinders to get their share, and who, in the end, has to pay for the risk of the "risk-reward" equation in what was a pretty speculative high-tech market. Will it be the FDIC and our tax dollars? Time will tell.

Sorry to be so pessimistic, but I chose my username for a reason (C.S. Lewis fans will understand). -- 'Glum

[Moby Grape]

Typical NYT....there is NO mention of RUBIN being at Citicorp...if Cheney had been there, Cheney's NAME would be in the headline, and many times in the body of the article.

[1Old Pro]

Yep, not all big corporations have crooks as CEO's, just the ones that give generously to Demorats.

[gridlock]

Bumpa

[connectthedots]

Looks like Citi Group can open up its checkbook, sign a blank check and hand it to the bankruptcy court to fill in later when the scope of its fraud is determined.

[El Sordo]

Bah..

All we'll see from the media is: Houston, Houston, Houston, Houston, Houston, Houston, Houston, Houston, Houston. Houston, which is in Texas, you know.... Why was GWB not paying attention to what was happening in his own state... etc....

ad nauseum

[connectthedots]

Your comments would be appreciated.

[FryingPan101]

Somewhere, amidst the legal but scummy antics, will sit Mr. Rubin.

[Political Junkie Too]

In my opinion, what we're seeing is the collapse of what was supposed to be a 16-year plan. Remember, Gore was supposed to win in 2000, thereby propping up the Clinton machine for another eight years. Since Bush won, the wheels came out from under the machine, and the markets that Clinton manipulated (through a lax SEC and insider dealing) are now correcting.

-PJ

[USA21]

Citigroup, J.P. Morgan Marketed Enron-Type Deals to Other Firms

Tue Jul 23, 1:07 AM ET

Citigroup Inc. (NYSE: C - News) and J.P. Morgan (NYSE: JPM - News) Chase & Co . , already facing scrutiny for devising allegedly deceptive transactions for Enron Corp., marketed similarly structured deals to a slew of other companies, Tuesday's Wall Street Journal reported, citing testimony that a senior congressional investigator will give at hearings that start today.

The names of the other companies weren't disclosed.

The hearings, part of a Senate investigation into the role banks played in Enron's troubled finances, are the latest in a series of investigations into the two banks regarding their ties to Enron, which filed for bankruptcy-court protection late last year. The investigations include separate probes conducted by the Securities and Exchange Commission ( news - web sites) and the office of Manhattan District Attorney Robert Morgenthau.

Now, a person familiar with the matter says, the Justice Department ( news - web sites)'s Enron Task Force also is looking into the roles that financial institutions, including Citigroup, J.P. Morgan , Merrill Lynch & Co . and National Westminster Bank, now a unit of Royal Bank of Scotland PLC, may have played in Enron's demise.

Citigroup and J.P. Morgan declined to comment on the hearings or the investigations. Merrill and Royal Bank of Scotland couldn't be reached for a comment.

The deals under congressional scrutiny include arrangements known as Yosemite, devised by Citigroup, and Mahonia, devised by J.P. Morgan , both of which were designed to make Enron's public disclosures more appealing to investors, according to the testimony.

An official familiar with the investigation will testify at today's hearings before that panel that Yosemite, Mahonia and other deals allowed Enron to understate its debt by 40% while overstating cash flow by as much as 50%, according to a draft of his statement. Cash flow is a crucial measure of financial health for energy companies such as Enron.

"The evidence indicates that Enron would not have been able to engage in the extent of the accounting deception it did, involving billions of dollars, were it not for the active participation of major financial institutions," says a copy of the testimony.

Banks such as J.P. Morgan and Citigroup were "willing to go along with and even expand upon Enron's activities."

J.P. Morgan , in fact, had a "pitch book" to sell other companies on similar financing vehicles, according to a copy of the testimony. J.P. Morgan entered into similar transactions with seven other companies, while Citigroup shopped such deals around to as many as 14, with at least three entering into such relationships, the testimony says.

The hearings will focus on a commodity-trading vehicle known as a prepay, in which a financier gives money in exchange for future delivery of a commodity such as gas, gold or oil. Such arrangements are common, but in the hands of Citigroup and J.P. Morgan , they became the building blocks for extremely complex transactions that Enron used to disguise debt as trades and create the appearance the company was generating cash, people familiar with the matter said.

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

[gridlock]

A lawyer for Enron, Robert S. Bennett, said tonight that he was unfamiliar with the Roosevelt transaction

Uncle Bob, is that you?

When investigating organized crime, it is always important to follow the money. But it is also instructive to follow the lawyers. If Clintoon's old lawyer is now representing Citigroup, I think that speaks volumes about who is actually in control of this criminal enterprise.

[Pining_4_TX]

Interesting how the NYT avoids naming names. I didn't see any mention of Lieberman or Rubin, did you?

[mware]

Sean is going to cover the story on his radio show. Not sure what research he did but he mentioned Lieberman.

[TheGrimReaper]

Where's little Bobby Rubin??