Citi Underwriter Started Sending Higher-Ups Warnings Re: Mortgage Trubs Back In 2006

Nobody really listened to him much though, probably because the subject lines of his emails to Bob Rubin and Co were fairly mundane (“THIS LOOKS REALLY FUCKING BAD, FELLAS”) and he forgot to mark them high alert.

“I started issuing warnings in June 2006 and attempted to get management to address these critical risk issues,” said Richard Bowen, who was chief underwriter for correspondent lending in Citigroup’s consumer-lending group. “These warnings continued through 2007 and went to all levels of the consumer-lending group.” In a November 2007 e-mail headlined, “URGENT-READ IMMEDIATELY-FINANCIAL ISSUES,” Bowen said he warned top managers including then Executive-Committee Chairman Robert Rubin of “possibly unrecognized financial losses” among other risks.

The week after Bowen sent his e-mail to Rubin, he received a “very brief” call from a lawyer in the office of Citigroup’s general counsel, he said during his live testimony today. The lawyer assured Bowen his concerns would be taken “seriously,” he said. Bowen wasn’t contacted again until January 2008, when he explained “details” to lawyers in the general counsel’s office during a series of conference calls lasting a total of five hours, he said.

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21 Responses to “Citi Underwriter Started Sending Higher-Ups Warnings Re: Mortgage Trubs Back In 2006”

  1. Anonymous says:

    It obvious no one responded because he did not develop the appropriate red/yellow/green metrics to track executive compliance with the required action. If only had had wrapped some project management around his email, then things would have been actioned in time.

    I bet this joker never even filed his TPS reports on time, and he has the gall to question Sr. Management. Hurmph.

  2. Student_Driver says:

    Bess, Congressional hearing clobbering Citi Execs.. you should consider a live blog… FWIW.

  3. Bess Levin says:

    @2 you mean the one tomorrow with prince and rubin? obviously I’m planning on it.

  4. guest says:

    My spam filter automatically gets rid of e-mails with subject line IN ALL CAPS or including the word URGENT. Maybe they have the same thing @ Citi?

  5. guest says:

    The fact that it took them until January 2009 to shitcan this chucklehead tells you everything you need to know about management at Citi.

  6. John Paulson says:

    I remember the day we found out all this paper was fucked. ‘Can remember it like it was yesterday.

    It was July 2006, and we had just crunched numbers for <3 hours. I hit the enter key on my excel sheet, and the sprinkler system immediately started going off. Red sirens were spinning in the hallways, light strips blazed across the carpets, and we evacuated the building via stairwells. Once we reconvened at our "special meeting place" outside the building, we each removed Nature Valley granola bars from our emergency fanny packs, sat indian-style across the lawn, and devised a contingency plan. The only man that didn't remove his painter mask was Xian Li. However, he always wore one, so we moved on accordingly.

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  8. guest says:

    Bullshit. At that time there were maybe four or five people who could’ve foreseen the problems ahead, a very small group, and they were all close personal friends of Alan Greenspan.

  9. Student_Driver says:

    No Bess, I mean Tom Maheras, Dave Bushnell, Murray Barnes, and Nestor Dominguez… These are the people who ran the business and had direct oversight

    much more interesting than Chuck who was too far removed to have a clue. CSPAN 2 live

    He asked them to raise their hands if they lost sleep.

    He asked Tom if he considered giving back the bonuses…

  10. @8: Besides Gasparino, who were the other 4 who knew?

  11. Anal_yst says:

    Ok, and this is a surprise to anyone, why?

  12. meistro says:

    The credit markets had already frozen in the summer of 07, so this warning was way to late (though early enough to hedge a bit). The biggest hedge trades had already been put on. 2006 is a whistle blower, late 2007 is someone who already saw the credit markets crack.

  13. Anonymous says:

    Well meistro the first line of the article says:

    “I started issuing warnings in June 2006″

    But keep swinging chief.

  14. Anonymous says:

    You all have no freaking clue, do you? C and C alone started this fall into a crumbling heap of garbage we used to be proud to be a part of. C knew exactly what they were doing, and I have proof that it started long before 2006. Mr. Bowen just happened to be the only one STRONG and SMART enough to stand up for what was right.

  15. Anonymous says:

    @14, which part of C, “knew exactly what they were doing”…. if you were there, then you know that there were many, many moving parts…and many players, not all co-ordinated.

  16. Anonymous says:

    That was part of the problem (still is)- too many players and no coordination, too many silos, and the right hand not knowing what the left hand was doing. AND about every six months they would shake ’em all up and switch all the management around (all the way to the top) which has been stated “so nobody could be held accountable”. Ask around how many bosses people had in a period of 5 years from 2005-2010. In 5 years I have had 5…all SVPs.

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