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LATE  TO EARLY : BILLIONS IN SUBPRIME LOSSES 

Committee meeting and brought up to the full board. A presentation concluded that
“total sub-prime exposure in [the investment bank] was bn with an additional

bn in Direct Super Senior and bn in Liquidity and Par Puts.” Citigroup’s total
subprime exposure was  billion, nearly half of its capital. The calculation was
straightforward, but during an analysts’ conference call that day Crittenden omitted
any mention of the super-senior- and liquidity-put-related exposure as he told par-
ticipants that Citigroup had under  billion in subprime exposure. 
A week later, on Saturday, October , Prince learned from Crittenden that the
company would have to report subprime-related losses of  to  billion; on Mon-
day he tendered his resignation to the board. He later reflected, “When I drove home
and Gary called me and told me it wasn’t going to be two or  million but it was go-
ing to be eight billion—I will never forget that call. I continued driving, and I got
home, I walked in the door, I told my wife, I said here’s what I just heard and if this
turns out to be true, I am resigning.” 
On November , Citigroup revealed the accurate subprime exposure—now esti-
mated at  billion—and it disclosed the subprime-related losses. Though Prince
had resigned, he remained on Citigroup’s payroll until the end of the year, and the
board of directors gave him a generous parting compensation package: . million
in cash and  million in stock, bringing his total compensation to  million from

 to . The SEC later sued Citigroup for its delayed disclosures. To resolve
the charges, the bank paid  million. The New York Fed would later conclude,
“There was little communications on the extensive level of subprime exposure posed
by Super Senior CDO. . . . Senior management, as well as the independent Risk Man-
agement function charged with monitoring responsibilities, did not properly identify
and analyze these risks in a timely fashion.” 
Prince’s replacements as chairman and CEO—Richard Parsons and Vikram Pan-
dit—were announced in December. Rubin would stay until January , having
been paid more than  million from  to  during his tenure at the com-

pany, including his role as chairman of the Executive Committee, a position that car-
ried “no operational responsibilities,” Rubin told the FCIC. “My agreement with Citi
provided that I’d have no management of personnel or operations.” 
John Reed, former co-CEO of Citigroup, attributed the firm’s failures in part to a
culture change that occurred when the bank took on Salomon Brothers as part of the
 Travelers merger. He said that Salomon executives “were used to taking big risks”
and “had a history . . . [of] making a lot of money . . . but then getting into trouble.” 

AIG’S DISPUTE WITH GOLDMAN:
“THERE COULD NEVER BE LOSSES”

Beginning on July , , when Goldman’s Davilman sent the email that disrupted
the vacation of AIG’s Alan Frost, the dispute between Goldman and AIG over the need
for collateral to back credit default swaps captured the attention of the senior manage-
ment of both companies. For  months, Goldman pressed its case and sent AIG a for-
mal demand letter every single business day. It would pursue AIG relentlessly with