Wednesday, August 6, 2008

Citibank May Have to Buyback Several Billion in Illiquid Securities

Citigroup is in talks with state and federal regulators to resolve allegations of wrongdoing in the auction-rate-securities market that could result in its buying back several billion dollars of the illiquid securities, according to WSJ.

If Citi reaches an agreement with regulators, the firm could be forced to spend more than $5 billion to buy out individuals, charities and other investors whose cash is tied up in the frozen auction-rate-securities market.

David Markowitz, chief of New York state's investor protection bureau, had accused Citi of wrongly telling customers that auction-rate debt was safe, liquid and the equivalent of cash.

Didn't they put Charles Keating away for just this kind of thing?

Please explain to me again why the government is propping up a bunch of incompetent, crooked bankers?

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