A panel tasked with identifying the causes of the financial crisis will interview current and former executives of Citigroup (NYSE: C) this week about the bank’s involvement in bringing in trillions of dollars worth of high-risk mortgage debt into the banking system.
The hearings this week by the Financial Crisis Inquiry Commission (FCIC) are the first to focus on a single bank. Witnesses will include former Citigroup CEO Chuck Prince and former Chairman Robert Rubin, who was Secretary of the Treasury Department during the Clinton Administration.
The FCIC will also hear from former Federal Reserve Chairman Alan Greenspan, a former risk officer with failed sub-prime lender New Century Financial Corp and former executives from government-backed mortgage giant Fannie Mae.
Citigroup was a major sub-prime lender through its CitiFinancial subsidiary. Citi pooled its sub-prime loans as well as loans purchased from other mortgage firms and sold them as collateralized debt obligations to investors. When the borrowers went into default, Citigroup absorbed substantial losses from its mortgage related investments.
The FCIC is setup like the 9/11 commission which examined failures in intelligence preceding the September 11th, 2001 terrorist attacks. Like the 9/11 commission, the FCIC has the authority to issues subpoenas to compel witnesses to testify or force companies to turn over documents. The commission is tasked with examining 22 topics related to the financial crisis and has a report that will be due on December 15th.
