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From: Jaq (12.236.178.152)
Subject:         Testimony - CitiGroup KNEW it was selling #@$#% but did it anyway.....
Date: October 24, 2010 at 5:59 pm PST

Yet, this is okay with people today who want smaller government or No Regulations or No Accountability. Charging the regulatory commission with inhibiting business, the Tea Party wants us to believe that business or banks can self-regulate. Yeah, right, I am not so naive.

    "The delegated flow channel purchased approximately $50 billion of prime mortgages annually. These mortgages were not underwriten by us before they were purchased. My Quality Assurance area was responsible for underwriting a small sample of the files post-purchase to ensure credit quality was maintained.

    "These mortgages were sold to Fannie Mae, Freddie Mac [We will come back to this - JM] and other investors. Although we did not underwrite these mortgages, Citi did rep and warrant to the investors that the mortgages were underwritten to Citi credit guidelines.

    "In mid-2006 I discovered that over 60% of these mortgages purchased and sold were defective. Because Citi had given reps and warrants to the investors that the mortgages were not defective, the investors could force Citi to repurchase many billions of dollars of these defective assets. This situation represented a large potential risk to the shareholders of Citigroup. --Mr. Richard Bowen, former senior vice-president and business chief underwriter with CitiMortgage Inc.


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