Citigroup, ranked as the U.S.’s fifth largest bank by assets, has been selected by the U.S. treasury to channel billions of dollars in rescue funds from the government to small businesses and is “working around the clock,” according to CEO Michael Corbat, to make sure everything goes smoothly.
Citigroup knows how to get money out of the U.S. treasury – and also how to give it back in fines and penalties, as evidenced when the company was caught in a series of frauds dating back to 2008.
During the Great Recession, Citigroup was awarded the biggest bailout in the history of banking, even after its then-top executives cashed out stock options worth more than $200 million. It was one of the banks deemed “too big to fail.”
In the months after the 2008 market crash, the bank gobbled up $2.5 trillion in undisclosed Federal Reserve loans, $45 billion in cash from the U.S. treasury, government guarantees of more than $300 billion against its assets, loan guarantees of $5.75 billion, and $26 billion in additional guarantees from the Federal Deposit Insurance Corporation.
Citigroup has expressed its gratitude, as well as demonstrated its skills in money management, by scamming investors and the government. Among the infractions reported by Wall Street on Parade:
- In November 2019, Citigroup settled with England’s bank regulators for $57 million in fines for falsely inflating its reported capital and liquidity levels.
- In May 2019, Citigroup agreed to pay the U.S. Department of Justice $97 million in fines in a money-laundering case.
- In September 2018, the bank paid the U.S. Securities and Exchange Commission $13 million in fines for improperly operating an internal stock exchange where it traded its own shares.
- In June 2018, Citigroup came to a $100 million settlement with states over allegations that it rigged interest rates.
- In June 2018, Citigroup agreed to pay $335 million to credit card customers for violating the Truth in Lending Act.
- In May 2016, the Commodity Futures Trading Commission negotiated a $425 million fine from Citigroup over allegations the bank had rigged interest rates from 2007 into 2012.
- In May 2015, Citigroup’s Citicorp unit pled guilty to a felony charge of rigging foreign currency markets and paid $925 million to the U.S. justice department and $342 million to the Federal Reserve. Under the same case, it paid another $1 billion to U.S. and U.K. regulators.
PUBLISHER’S NOTE: It’s socialism for the rich and go-it-alone capitalism for the rest of us.
Venture-Backed Firms to Get Bailout Funds
Start-ups and young companies backed by wealthy venture capital firms will have access to federal rescue funds, thanks to a tweak to the rules governing the funds’ disbursement.
The tweak was made to the so-called “affiliation rule”: companies with fewer than 500 employees were barred from collecting any of the money if any of their investors have a portfolio of companies that together have 500 or more workers.
Venture capital firms hold investments in companies vulnerable to damage from the shutdown. In recent weeks, investors have pressured their start-ups to conserve cash, which has led fledgling businesses such as Bird, an electric scooter company, and real estate brokerage Compass, to lay off workers.
Nancy Pelosi, Democrats’ leader in the House, and Kevin McCarthy, her Republican counterpart, pressured treasury secretary Steven Mnuchin to change the rule to fit venture-backed companies into it.
“This will get fixed,” vowed Kevin McCarthy, the California representative who leads House Republicans.
Pelosi and McCarthy both represent California, home to Silicon Valley and many of the nation’s wealthiest venture firms.
The move also has been vocally supported by California Senator Kamala Harris, whose suspended presidential campaign received more contributions from individuals in the venture capital business than any other candidate this election cycle.
Job Security for Lobbyists
As Congress begins to dole out cash and loans to victims of the economic collapse, and as it begins to shape another bundle of social and economic rescue measures, lobbyists are working overtime.
Companies need help applying for assistance and industries, and interest groups want the next federal rescue package to reflect their interests.
“I’ve never seen the demand for information like right now,” said Ed Newberry, managing partner of the regulatory and policy practice at law firm Squire Patton Boggs, “and I’ve been practicing for 30 years.”
Lobbyists began developing both their marketing plans and their expertise in navigating the rescue package, known as the “Coronavirus Aid, Relief, and Economic Security” Act (CARES), weeks before it was signed into law.
Two former congressional staffers landed gigs with California-based Corona Pathology, a firm offering lab services, to help it through the regulatory maze.
A former Senate aide is now a lobbyist for two aviation-related firms hoping to collect CARES money. The labor union representing national park police hired a lobbying firm to persuade the White House to keep the parks open during the pandemic.
At the beginning of the Great Recession, the lobbying trade grew 22 percent to become a $3.5-billion industry, according to the Center for Responsive Politics. The industry will become even more lucrative now.
Companies “are very anxious to understand what [the CARES Act] means, how it works,” said Alex Vogel, whose Washington-based Vogel Group just signed two new clients in Texas.
TRENDPOST: It should be noted that in last week’s job report of some 701,000 people put out of work, making it the worst decline since 2009, the government created 12,000 new jobs.
Moreover, while politicians are locking down states, unlike the working people who they have put out of work, good times or bad, they get their paycheck, healthcare, and other perks and benefits from We the People in the name of taxes.
And, while the working class are not paid when they don’t work, politicians and the broad range of “public servants” who are not working still get paid.