Investment banks have been proving over the past 6 years, that when you can spend $2.7 billion on legal fees in a quarter you can get away with pretty much every crime and violation in the book. Their proceeds of crime cash flow is so plentiful, that they can wrangle out of pretty much every breach with a cost-of-doing-business-payment to regulators or politicians. The trouble is that eventually, it is bad for earnings; and that’s when shareholders finally get peeved and executives fall from grace.
Here is a prediction: Citigroup will go bust a third time and look to the taxpayers for a third bail out before this next down cycle completes. The question is, when, oh when, will we the people, finally cut these corrupt institutions off from the public purse and push the investment banking arms back out to live and die on their own dime? See: Citigroup Expects $2.7 billion in fourth-quarter-legal-expenses.
“Citigroup Inc. said it would spend $2.7 billion to bolster its legal reserves, wiping out the bulk of its expected fourth-quarter profit and delivering a fresh setback in what was supposed to be a turnaround year.
The nation’s third-largest bank also said it would recognize $800 million in so-called repositioning costs, its largest cost-cutting tab since Chief Executive Michael Corbat took the reins two years ago.
The developments signal that the New York company is struggling to put its house in order amid deepening legal probes and uneven economic conditions that pressure profits in Citigroup’s global banking and trading businesses…
Citigroup was the only big bank to disclose major new expenses Tuesday. Top executives of Bank of America Corp. and Wells Fargo & Co. also presented at an investor conference hosted by Goldman Sachs Group Inc.”
For some important historical context see: The Untold Story of the Bailout of Citigroup