Citigroup has come under attack from a prominent analyst and accountancy experts for failing to disclose regulatory criticism of the bank’s valuation of troubled securities during the financial crisis.
Newly released documents show that on February 14 2008, the Office of the Comptroller of the Currency, one of Citi’s main regulators, expressed concerns about the way Citi valued mortgage-backed securities.
In a letter sent by John Lyons, a senior OCC official, to Vikram Pandit, Citigroup’s chief executive, the regulator said it had found “several deficiencies that need to be addressed” in the way Citi valued illiquid collateralised debt obligations.
Citi suffered more than $50 billion in losses during the crisis, largely due to writedowns on CDOs, prompting the US government to launch a $45 billion bail-out of the bank.
The OCC document, released by the Financial Crisis Inquiry Commission, a panel appointed by Congress, said “weaknesses were noted” in several aspects of Citi’s valuation methods.
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