Former Citigroup (C) CEO Charles Prince apologized Thursday for his firm's role in the financial crisis and for the losses the bank incurred that forced it to take a $45 billion government bailout.
"I'm sorry the financial crisis has had such a devastating impact for our country," Prince testified before the Financial Crisis Inquiry Commission, a bipartisan panel examining the origins of the crisis. "I'm sorry about the millions of people, average Americans, who lost their homes. And I'm sorry that our management team, starting with me, like so many others could not see the unprecedented market collapse that lay before us."
Prince was joined in Washington by Robert Rubin, the former Citigroup board member and Treasury Secretary, who likewise showed contrition, though he maintained that the causes of the crisis were so far-flung and complex that almost no one could have seen it coming. "We all bear responsibility for not recognizing this, and I deeply regret that," Rubin said in his testimony.
Prince stepped down as Citi's chairman and CEO in November 2007 after the bank estimated it would suffer $7 billion to $11 billion in writedowns related to subprime loans.
"The largest losses at emanated from what were perceived at the time to be extremely safe 'super-senior' [securities] that carried the lowest possible risk of default," Prince said. "It bears emphasis that Citi was by no means alone in the view and the everyone, including our risk managers, government regulators [and] other banks all believed that these securities held virtually no risk."
Rubin, who has sought to distance himself form Citi's meltdown, told the panel that prior to September 2007 he didn't know the bank had retained about $43 billion in toxic assets on its own books. "I feel confident that the relevant personnel believed in good faith that more senior level consideration of these particular [assets] was unnecessary because the positions were AAA rated and appeared to bear [minimal] risk of default," Rubin said.
Taxpayers still own a 27% stake in the bank, although last month the Treasury Department said it will sell its 7.7 billion shares of Citigroup common stock it received in June, 2009 in connection to a $45 billion federal bailout. The government paid $25 billion for the stake, or $3.25 a share.