Citigroup (NYSE:C) Screwed Up Mortgages

Citigroup CDOs were known to be a disaster

In a hearing today, former Citigroup (NYSE:C) executives said their warnings of troubled mortgages, which included over half the CDOs, which were bad mortgages used to create bonds, where the bonds had a AAA rating in spite of the underlying problem mortgages. That was according to Richard Bowen who used to work at Citigroup as the head underwriter.

Bowen alleged he communicated with a number of top executives about the mortgage troubles at Citigroup, but was for the most part ignored.

Citigroup chairman Robert Rubin was one of those cited as not responding to the warnings, and he will have a chance to answer those allegations when he appears before the committee on Thursday.

Former Citigroup (NYSE:C) Executive Claims Rubin Warned

In the ongoing hearings today, a former executive of Citigroup (NYSE:C) claims he warned chairman Robert Rubin and other executives about the risks associated with mortgages, suggesting he continued to warn them, while nothing was done in response.

Former mortgage executive at Citigroup, Richard Bowen, claims as far back as 2006 he warned Citigroup leaders about the extraordinary mortgage risks at the company, with over 60 percent of the mortgages problem mortgages.

Bowen also asserts other executives at Citigroup were violating the risk management standards at the company in 2006. He claims at that time he began warning executives about the situation, including e-mailing Rubin about it in the latter part of 2007.