“I’m sorry. These are people I love and care about. You could imagine emotionally it’s not easy to see what’s happened.”

-John S. Reed, retired Chairman and CEO of Citibank, on why the Congress was wrong to repeal the Depression-era Glass- Steagall Act in 1999

>

A fascinating mea culpa from former Citi CEO John Reed.

I always find it intriguing when people who were once at the pinnacle at their profession (raking in the bucks), when they suddenly have their existential crises and personal epiphanies. The realization that their lives meant nothing, or worse, that their entire existence was far from the benign experience they had previously self rationalized. Especially when there have been some very ugly repercussions to their actions and it hits all at once.

OK, that’s enough pop psychology for a Sunday. I give him credit for at least making the effort to recognize the error and fix it. There is a laundry list of fools who did no such thing.

Here’s Bloomberg:

“John S. Reed, who helped engineer the merger that created Citigroup Inc., apologized for his role in building a company that has taken $45 billion in direct U.S. aid and said banks that big should be divided into separate parts.

Citigroup was formed in 1998 when Citicorp, a commercial bank, combined with Sanford I. Weill’s Travelers Group Inc., which owned the investment firm Salomon Smith Barney Holdings Inc. The New York-based company lost $27.7 billion in 2008 and took $118 billion in writedowns. Now 34 percent-owned by the Treasury Department, Citigroup sought help in the wake of a credit freeze that claimed three of Wall Street’s biggest firms and led to the deepest recession in 70 years.

Congress’ overhaul of U.S. financial regulations should include ordering banks to hold more capital, ensuring executives’ compensation is aligned with long-term profitability and banning firms that take deposits from also engaging in equities and fixed-income trading, Reed said.

Good stuff . . .

>

Source:
Reed Says ‘I’m Sorry’ for Role in Creating Citigroup
Bob Ivry
Bloomberg, Nov. 6 2009

http://www.bloomberg.com/apps/news?pid=20601109&sid=albMYVE7D578&pos=10

Category: Bailouts, Regulation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

40 Responses to “Reed: Sorry About That Whole Ginormo CitiBank Thingie”

  1. Wes Schott says:

    ..and then there’s this…

    Goldman Sachs boss says banks do “God’s work”

    http://www.reuters.com/article/newsOne/idUSTRE5A719520091108

  2. Winston Munn says:

    God doesn’t even do God’s work anymore – it’s all outsourced.

  3. danm says:

    Typo? Work like a dog maybe? But even that would not make much sense.

    Amazing how we can rationalize evertyhing. And the guiltier we are, the closer we see ourselves as god! lol

  4. bsneath says:

    I respect and admire the Reeds and Greenspans for their ability to admit they were wrong.

    It is very difficult to do when one has invested in a philosophy only to learn it was flawed.

    These guys have character and integrity. Lesser souls would continue to make up excuses.

  5. bsneath says:

    Wes Schott Says:
    November 8th, 2009 at 2:40 pm
    ..and then there’s this…

    The chief executive of Goldman Sachs, which has attracted widespread media attention over the size of its staff bonuses, believes banks serve a social purpose and are doing “God’s work.”

    HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HAHA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA

    That was a good one!

  6. DL says:

    bsneath @ 3:09:

    Cheer up.

  7. http://joshfulton.blogspot.com/2009/11/democrats-pass-health-care-bill-in.html

    btw, it’s nice to hear John Reed “…suddenly had his existential crisis and personal epiphany.”

  8. mitchn says:

    Bneath –

    Here’s another howler from the article: “Being the prime target for popular and political outrage could put Goldman first in line for draconian new regulation….”

  9. bsneath says:

    mitchn – Blankfein is certainly promoting this course of action with his comments.

    I still wonder if we would not be better off if we did not have Goldman Sachs style investment banking.

    How much “real wealth” has been created through M&A, Junk Bonds, HFT, Structured Finance, Derivatives? As opposed to how much has capital been stirred around and siphoned off?

    Further, how efficient are our markets today? 30% interest on credit cards – is that efficient for the consumer or small business owner? Huge reductions in the money market and commercial paper markets. Is that efficient for corporate cash flows? How about auction bonds in the municipal markets? How about state and local pension funds who were sold billions in toxic CDO & CMOs? Are they more efficient today, or will they need to reduce future services in order to set aside more funding to cover unfunded liabilities?

    Do you believe our economy better off today because of the past involvement of investment banks?

    Perhaps the regulations being considered need to be draconian enough to put this failed business model out of existence. I am certain that other innovative but less destructive forms of finance will become available.

    Goldman Sachs serves absolutely NO social value. They only serve a self-serving function that they have rationalized (as any criminal must do) to be a noble cause. Otherwise they would have to admit that they are scumbags of the earth. Unlike Reed or Greenspan, they do not have this capacity.

  10. bsneath says:

    Meant to say “our economy is better off”

    Also, did not mean to imply that Messers Reed or Greenspan are scumbags. Just that they were will to admit when they were wrong.

  11. Mannwich says:

    Wow, a Wall Streeter with a conscience. Who knew? What novelty. Is he terminally ill or something?

  12. Mannwich says:

    So if this is true and the TBTF’s will alway be TBTF, then how can these firms STILL be publicly-traded comanies in our capital markets and how can they still pay their people obscene amounts of money with this not being theft? Me-thinks that if they are indeed making record profits with the implicit or EXPLICIT backing of We the Sheeple, then much of those profits should be kicked back to all Americans in the form of a bailout dividend of some sort.

    http://www.zerohedge.com/article/here-there-be-big-nymbers-sic

  13. Gatsby says:

    There’s been a lot of chatter regarding Blankfein’s “God’s Work” statement. It’s easy for some of us to laugh at the absurdity, but there is something unsettling about the unimaginably repugnant tone Blankfein took.

    Blankfein may be actually trying to become the next great American villain. What an embarassment (read stain) to (on) his industry and his community.

    I can’t wait to see BR’s take.

  14. flipspiceland says:

    Apologies not accepted. From Greenspan, or Reed.

    At least Lord Blankfein has enough steel in his balls to mock us, without mercy.

    Him, I get, an enemy of the first order that I personally would like to emulate, since I can do nothing to execute him and his firm and nor chop of any of the tentacles (alumni) the vampire squid has inserted with a stranglehold on every strategic financial crossroads.

    Apology means less than nothing unless you do something to fix your transgression. Nothing.

  15. Winston Munn says:

    “Goldman Sachs boss says banks do ‘God’s work’”.

    Deity Backed Securities?

  16. Winston Munn says:

    “At least Lord Blankfein has enough steel in his balls to mock us, without mercy.”

    I can hear him now. “The class war is over, and you (the poor) lost.”

  17. Mannwich says:

    @Winston: And you forgot: “You’re all just jealous, na, na, na, na, nahhhh”.

  18. danm says:

    How much “real wealth” has been created through M&A, Junk Bonds, HFT, Structured Finance, Derivatives?
    —————
    A lot of that wealth is Dark Matter.

    Just like the cycles were dead at the turn of the last century, Business Week came out with this article on Dark Matter in 1995, which explained Ireland’s greatness and that the US was not running a trade deficit.

    http://www.businessweek.com/the_thread/economicsunbound/archives/2005/12/dark_matter.html?campaign_id=rss_blog_economicsunbound.

    The comment section is a knee slapper.

    I think I never read BusinessWeek again after reading that article.

  19. danm says:

    2005 not 1995. Wow, that’s a weird mistake.

  20. Patrick Neid says:

    Independent Community Bankers of America CEO Kenneth Guenther captured the audacity of the deal in an interview with Frontline:

    “Here you have the leadership — Sandy Weill of Travelers and John Reed of Citicorp — saying, “Look, the Congress isn’t moving fast enough. Let’s do it on our own. To heck with the Congress. Let us effect this.” And so they move towards effecting it, and they get the blessing of the chairman of the Federal Reserve system in early April, when legislation is pending. I mean, this is hubris in the worst sense of the word. Who do they think they are? Other people, firms, cannot act like this. … Citicorp and Travelers were so big that they were able to pull this off. They were able to pull off the largest financial conglomeration — the largest financial coming together of banking, insurance, and securities — when legislation was still on the books saying this was illegal. And they pulled this off with the blessings of the president of the United States, President Clinton; the chairman of the Federal Reserve system, Alan Greenspan; and the secretary of the treasury, Robert Rubin. And then, when it’s all over, what happens? The secretary of the treasury becomes the vice chairman of the emerging Citigroup.”

    http://tinyurl.com/6s75kg

  21. drewburn says:

    Reed didn’t have that much to do with it; neither did Sandy Weill. The snowball of deregulation and avoidance of regulation was only getting started under their tenure. I think Reed is being very honorable by admitting that some of the things done under his watch were the early foundations of the calamity. Others were much more culpable.

    There was a time when making money in finance required hard work, talent and taking real risk. The very modern version of finance involved none of this. Hopefully things will change. Bring back regulation. As damn ponders: Yes, much of very modern finance was unproductive to the “wealth of nations.” It was borrowing from Peter to pay THEM. Real business people do serve a public service; most of these asshats making the megabucks over the past 15 years have accomplished nothing for the public good.

  22. donna says:

    “OH sorry we bought up all those banks and made them change the laws and fucked everything up! Gosh, I’m so sorry! My bad!”

  23. DiggidyDan says:

    Nice Headline, and GO BUCS! See folks, the little guy still can win! LOL

  24. bsneath says:

    danm – Mandel’s thesis didn’t make any sense even back then.

    Patrick – The background info is interesting. I guess BR is right that a mea culpa coming from a former alpha-pr!@k is a bit hard to swallow (no pun intended).

  25. dblwyo says:

    Just for the record Reed was along for the ride – the primary mover and shaker was Sandy Weill, if you’ll go back and read the press of the time. All of this came out at the time but most especially during the Tech Bust when the transparent Chinese Walls between banking and IB were heavily discussed e.g. Jack Grugman, et.al.

    Now here’s the real kicker or two. Weill wanted to merge Traveler’s and Citi which he couldn’t under Glass-Steagal but nonetheless went ahead with and concluded, signed and started up BEFORE G-S was repealed, having become a dead letter by the facts on the ground.

    He then proceeded within two years or so (member fades) to get run out after Citi ran aground on the left hand biting the right both of them biting the feet and creating major legal problem after legal problem, which is the reason Chuck Prince was brought in. Chuck’s job was open because Weill had run out his protege Jaime Dimon, who was arguing for cleaning up the operations, putting in controls and generally making himself obnoxious by arguing with the boss.

    Too bad what goes round doesn’t always come round.

  26. impermanence says:

    “I respect and admire the Reeds and Greenspans for their ability to admit they were wrong.
    It is very difficult to do when one has invested in a philosophy only to learn it was flawed.
    These guys have character and integrity. Lesser souls would continue to make up excuses.”

    Do you really think these people didn’t know what was going on? These are REALLY smart people. Greenspan wrote a great deal on why what he did was wrong years before he ever did it. It’s all about greed. EVERYBODY has h/her price.

  27. bsneath says:

    impermanence, Agreed. I attempted my own mea culpa at 6:02.

  28. mitchn says:

    Bsneath @ 4:19 –

    I am with you 100%, brother.

  29. Moss says:

    I love how con men, con institutions, and con political parties use or reference God in an attempt to rationalize their true devious nature. I guess asking for forgiveness is a first step in acknowledging
    the truth. They always say the truth will set you free.

    I see one RepubliCON voted his ‘conscience’ on health care. Since he himself is a minority however it probably does not matter to the party of Cons.

  30. farmera1 says:

    I’m sorry, no doesn’t work. These people were just greedy, arrogant, social paths. These people knew what they were doing. Ever wonder where the yacths come from along the lake front in Chicago. Or how about the huge houses, or the vacation homes.

    I’ve long believed that pathological deregulation was a cover for stealing. Turns out to be true.

  31. MikeG says:

    These guys have character and integrity. Lesser souls would continue to make up excuses.

    Bull. Greater souls would have listened to the many well-reasoned arguments against repealing Glass-Steagall and not advocated it out of sociopathic arrogance and greed for empire. If he’s really remorseful, let him put up his massive personal loot to compensate some of the losses. His ‘apology’ is a drop in the ocean against the damage this parasitic opportunist and his ilk have done to the world.

    When people make ‘mistakes’ that put millions of dollars in their pocket, expect such ‘mistakes’ to be made again and again.

  32. Two predictions.

    1. The too big to fail banks will be broken up.

    2. Goldman is smart, but they got a little too cute. I think all the anti-Goldman rhetoric is snowballing.

  33. ezduzit says:

    that fort hood shooter also said he was doing god’s work. maybe these guys are related.

    more on topic, we don’t have enough legislators, with courage, to overturn glass steagall act repeal. that repeal killed the usa financial market. two contaminated groups, banks and brokers, were allowed to merge and procreate.

  34. some_guy_in_a_cube says:

    Weill has buildings named for him at some of the nations most elite universities. Reeds pisses and moans from the back bench, politely ignored.

    Winners smile. Losers say deal.

  35. scharfy says:

    At its peak, financial services and the like represented a disproportionate amount of GDP, and GDP growth in the last 15 years. We may argue the numbers, (15%-30%) depending on what you include, but t think no one can dispute that we have morphed from an industrial might, to a nation overly loaded with debt servicers and hedgefunds on the whole.

    So did America as a society get greedier? Why have the captains of industry (no saints either) been replaced in the swank neighborhoods by high end money shufflers?

    To me, just a normal response in demand – to an increase in supply at a given price.

    As long as Fed continues its criminally insane strategy of force-feeding cheap credit down the throats of America (to stimulate it), there will be no shortage of large firms to step up and distribute the debt to America, scraping some crumbs (big ones) for themselves along the way.

    Citi, and all the rest are a natural response the the orgy of dollars vomited upon us by Greenspan and Bernanke. All the regulatory stuff is incidental. As the money is printed – there will firms ready and willing to do the dirty.

    Thats how i sees it.

    And thanks for the apology. It really is sweet.

  36. V says:

    Has anyone else listened to this? Very good I thought.

    http://www.econtalk.org/archives/2009/10/calomiris_on_th.html

  37. ToNYC says:

    some_guy_in_a_cube Says:
    November 8th, 2009 at 9:41 pm

    Weill has buildings named for him at some of the nations most elite universities. Reeds pisses and moans from the back bench, politely ignored.

    Winners smile. Losers say deal.

    …and the King of the Jews (INRI) got crucified by the Romans! Time wounds all heels.
    Reed is a technocrat and his science didn’t fail him where a false sense of worth has blinded his soft science co-pirates. He can enjoy his stairway to heaven and beat the top-deckers on the Titanic while he spends the rest of his life earning immense satisfaction by figuring out how he can best give back the full measure of his part of the grand theft.

    Le secret des grandes fortunes sans cause apparente est un crime oubli , parce qu’ il a ete proprement fait.”
    —-from Le Père Goriot (1835), Part II —Honoré de Balzac
    The secret of a great success for which you are at a loss to account is a crime that has never been found out, because it was properly executed.

    Oops! this crime is outed!
    Oh, Lord of the Gold Sacks, great and powerful Oz, you surely noticed your bond buddymachermaven Jon Corzine got a taste of what’s in the wind.
    God’s work indeed, but it will feel like the Harpies tearing at what’s left of that soul once issued.

  38. torrie-amos says:

    agree with chartsandcoffee…………someone somewhere must realize the fed and govt are leveraged to the hilt and could not take another hit……….we can probably make it thru the mess, over time, if they eliminate all the land mines

    i did not read Reed’s article, it’s always the same BS, merges aquistions etc. etc., the guys at the top might not like things or agree with them, yet, when gazongo bonuses are there they all agree, cross-sellling the biggest bunch of BS that looks perfect on paper and is a disaster in the real world

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