Although Citigroup’s $7 billion settlement for blatantly misleading investors on the toxicity of their home loans is quite significant, it is nothing compared to the damage done by the role this bank and other financial institutions played in causing the Great Recession. Given BP had to set aside $20 billon to compensate Gulf Coast residents affected by the 2010 Gulf Coast Oil Spill, as well as pay massive fines, it seems Citi is getting off the hook cheap, especially considering the far broader impact the Great Recession had as compared to the impact of the Oil Spill. Even though it appears BP is attempting to get out of its pledge to set things right, this settlement actually does little to address the underlying causes of Citi’s harmful activities. Businesses do not simply act on company interests; they act on the interests of their management teams. This makes it essential for observers of industry to recognize a firm will not solely act on its perceived interests, but rather, its interests and the interests of its leaders as perceived by the business leaders. This means the causes of the Great Recession cannot be addressed unless the decision makers are taken to account.
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April 2020
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