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Notes to Chapter 8 577

52. Matt Tannin, Bear Stearns, email to Bella Borg-Brenner, Stillwater Capital, March 16, 2007; Greg
Quental, Bear Stearns, email to Andrew Donnellan, Bear Stearns, et al., June 6, 2007.
53. Charles Prince, interview by FCIC, March 17, 2010.
54. Regulators in Japan and the United Kingdom also came down on the company in 2004 and 2005.
In September 2004, Japan’s Financial Services Agency suspended Citibank’s ability to operate branches in
Japan because of the bank’s participation in alleged illegal activity in that country, and in the following
year the United Kingdom’s Financial Services Authority fined Citigroup $25 million for engaging in a
bond trading scheme labeled “Dr. Evil” by Citigroup bond traders. Financial Services Agency, Govern-
ment of Japan, “Administrative Actions on Citibank, N.A. Japan Branch,” September 17, 2004; Financial
Services Authority, “Final Notice” to Citigroup Global Markets Limited, June 28, 2005
(www.fsa.gov.uk/pubs/final/cgml_28jun05.pdf); David Reilly, “Moving the Market: Citigroup to Take
$25 Million Hit in ‘Dr. Evil’ Case,” Wall Street Journal, June 29, 2005.
55. Prince, interview.
56. Robert Rubin, interview by FCIC, March 11, 2010.
57. Dominguez, interview by FCIC, March 2, 2010. The CDO desk earned revenues of $367 million in
2005. Paul, Weiss, Citigroup’s counsel, letter to FCIC, March 31, 2010, in re the FCIC’s second and third
supplemental requests, “Response to Interrogatory No. 21.”
58. Janice Warne, interview by FCIC, February 2, 2010; Paul, Weiss, Citigroup’s counsel, letter to
FCIC, March 1, 2010, “Response to Interrogatory No. 18.”
59. Paul, Weiss, Citigroup’s counsel, letter to FCIC, March 1, 2010, “Response to Interrogatory No.
18.”
60. Moody’s Investors Service, “CDOs with Short-Term Tranches: Moody’s Approach to Rating
Prime-1 CDO Notes,” February 3, 2006, p. 11.
61. Citigroup Inc., Form 10-K, for the fiscal year ended December 31, 2007, filed February 22, 2008,
p. 91.
62. Everquest Financial Ltd., Form S-1, May 9, 2007, p. 93.
63. Dominguez, interview, March 2, 2010.
64. Ibid.; Warne, interview.
65. Dominguez, interview, March 2, 2010.
66. Warne, interview.
67. GCIB Capital Markets Approval Committee, Coventree Capital, “Liquidity Put Option,” draft as of
December 13, 2002, p. 4.
68. Ron Frake, interview by FCIC, March 11, 2010.
69. “Formal Agreement” between the Comptroller of the Currency and Citibank, July 22, 2003.
70. Moody’s Investors Service, “CDOs with Short-Term Tranches.”
71. Ibid.; Bank of America Corporation, Form 10-Q for the quarterly period ended September 30,
2007, p. 19; Floyd Norris, “As Bank Profits Grew, Warning Signs Went Unheeded,” New York Times, No-
vember 16, 2007.
72. Dominguez, interview, March 2, 2010.
73. Paul, Weiss, Citigroup’s counsel, letter to FCIC, June 23, 2010, “Responses of Nestor Dominguez,”
p. 6.
74. OCC, “Subprime CDO Valuation and Oversight Review—Conclusion Memorandum,” Memoran-
dum from Michael Sullivan, RAD, and Ron Frake, NBE, to John Lyons, Examiner-in-Charge, Citibank,
NA, January 17, 2008, p. 6,
75. Ibid.
76. Tobias Brushammar et al., memorandum to Nestor Dominguez et al., “Re: Liquidity Put Valua-
tion,” October 19, 2006, pp. 1, 3–4; “Liquidity Put Discussion,” pt. 1, produced by Citi.
77. “Liquidity Put Discussion,” produced by Citi.
78. Data provided by Moody’s to the FCIC.
79. Gary Gorton, interview by FCIC, May 11, 2010.
80. AIG, 2008 10-K, p. 133. Assets are assigned a “risk weighting” or percentage that is then multiplied
by 8% capital requirement to determine the amount of risk-based capital.
81. AIG, CDS notional balances at year-end 2000 through 2010 Q1, provided to the FCIC.
82. The total would reach $78 billion by 2007 (ibid.).