Former Citigroup (NYSE: C) Chairman to Testify before Financial Crisis Inquiry Commission
Charles Princes, former chairman of Citigroup (NYSE: C), will be answering questions related to Citigroup’s near downfall for the first time since the financial crisis ended to the Financial Crisis Testimony Commission (FCIC) on Thursday.
Prince stepped down from his positions following the revelation that the company would need to take $17 billion worth of write-downs in November 2007 and has remained largely quiet on the events that led up to his resignation.
Citigroup took a total of more than $100 billion in write-downs and credit charges during the financial crisis because of its high exposure to leveraged loans, collateralized debt obligations and sub-prime mortgages.
The risky investments that Citigroup made required it to take a $45 billion injection of capital from the U.S. Treasury as well as taking a loan-loss guarantee of $306 billion, more bailout aid than any of its competitors.
During his testimony to the FCIC, Prince will explain his involvement in the bank’s financial troubles in hopes of helping the commissioners to understand what went wrong at the bank.
Prince previously led Citigroup as its chief executive from October 2003 and then served as Chairman in April 2006. Prince’s exist from the company was triggered by a research note from Meredith Whitney, who worked for CIBC capital markets at the time, claiming that Citi did not have enough capital on its balance sheet, a claim that knocked $369 billion off global equities in a single day and send Citigroup’s stock price through the floor.
The commission will also hear from four of Prince’s lieutenants involved in sub-prime related structured products including Thomas Maheras, former co-leader of Citigroup’s investment bank David Bushnell, the bank’s former chief risk officer.