Judge Orders SEC to Explain

How Citi is getting off easy

That last one is a doozy because it highlights a major weakness in the settlement -- its narrow scope. The SEC limited its legal case against Citi to a single transaction, a CDO dubbed "Class V Funding III" that the financial giant assembled in 2006-07 as the roof was caving in on the housing sector. The investment defaulted in a matter of months, while the bank made $160 million in profits and fees.

n other words, Citi appears to have left lots of bodies in the ground, but it's paying the price for only one of those hits. And even there it's getting off lightly. The SEC charged only one Citi banker under the settlement, a lower-level executive named Brian Stoker who was gracious enough to stick his head in the noose with a series of incriminating emails.

This is a matter of will and leadership. Its chairwoman, Mary L. Schapiro, while deserving credit for pushing investigations of structured investments, is sending the signal that she does not want to lose. Her agency is meekly willing to get token settlements when the situation calls for Old Testament justice.

Someday, the SEC will have to go up against a top executive who has resources to fight, and who was too sophisticated to put anything rash in writing. This seems to be our fate: our bankers took reckless risks, but our regulators take none.

Citigroup chairman Michael resignation

Everyone from analysts to insiders pointed to the 65-year-old banking veteran as the man behind the move that rattled Wall Street yesterday.

“Recall, in April Michael O’Neill replaced Richard Parsons as chairman of the board. This could have facilitated this move,” Barclays analyst Jason Goldberg said in a research report.

O’Neill’s ties to Citi’s new CEO, Michael Corbat, go back to Corbat’s days as head of Citi Holdings, the “bad bank” division that held the bank’s toxic assets in the aftermath of the financial crisis.

O’Neill had been chair of the Citi Holdings Oversight Committee since joining Citi’s board in 2009.

“They work well together,” sources say about the relationship between Corbat and O’Neill.

The Citi chairman has also made no secret about his desire to get his hands dirty in his new gig — a far different approach from his predecessor Parsons.