Bailout Sleuth:
by RYAN HOLEYWELL
Former Citigroup Inc. executives apologized for their role in the financial crisis but refused to accept responsibility for it during a hearing Thursday before the Financial Crisis Inquiry Commission.
Their testimony came on the second day of hearings by the FCIC, which is charged with investigating the causes of the financial crisis and this week is examining sub-prime lending and securitization.
"I'm sorry that our management team, starting with me, like so many others... couldn't see the market collapse laying before us," said former Citigroup Chief Executive Chuck Prince, who led the company from 2003 to 2007.
Citigroup received $45 billion in assistance through the Troubled Asset Relief Program, and the government holds 27 percent of its stock. The company's collapse was due largely to its exposure to collateralized debt obligations, which at the time were generally viewed as safe investments. Backed by home loans - and in some cases sub-prime home loans - their value plummeted once the housing bubble burst in 2008.
The executives attributed the crisis to low interest rates, which encouraged investors to borrow money and invest in the mortgage-backed securities. They also blamed regulators for allowing questionable sub-prime loans in the first place, and blamed ratings agencies for giving such high ratings to securities that turned out to be risky and, ultimately, toxic.
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