Citi Is Mad at Judge Rakoff

Wait until he tries to use his Citicard

Stay away, Judge

Citigroup is outraged by Judge Jed Rakoff’s demand for Citigroup to admit whether or not it had done anything wrong. The judge thinks Citigroup should have told investors about a one billion dollar investment fund Citigroup knew would fail before Citigroup sold the fund to the investors. (The investors lost $700 million, Citigroup made $160 million.) To settle SEC charges about fraud, Citi was to pay $285 million without admitting fraud—or anything. The judge called that “pocket change” for Citigroup. He rejected the deal because it was “not in the public interest.”*

Gee whiz, Judge Rakoff, what are you thinking? You want Citigroup to tell investors in advance that an investment it is peddling is worthless? If Citigroup disclosed stuff like that, Citigroup could lose money. Full disclosure is dangerous: How will banks be protected from the adverse consequences of what banks do?

Look what you have done, Judge. Citigroup is mad at you. If you have a Citigroup charge card, my advice is never use it again. If you try to buy a holiday present with it, you will be lucky if it ends with a clerk quietly saying your credit is “DENIED.” Could be a couple of heavies will show up to “escort” you out of the store. Handcuffs might be involved. And forget using any cards from other banks. Banks may compete with one another, but they also stick together.

Your honor, herewith and forevermore, use cash only. (And don’t try to get cash from a Citibank cash machine.)

*For details, see Judge Rejects an S.E.C. Settlement With Citigroup. New York Times, November 29, page 1.


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2 Responses to “Citi Is Mad at Judge Rakoff”

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