Today, Citigroup -- the world's largest financial services company -- announced a $2 billion settlement in an investor lawsuit over the company's involvement in the Enron scandal. These settlements are getting to be old hat for Citi:
The class-action settlement is the biggest in the long-running Enron debacle and one of the largest in corporate history, though less than the $2.58 billion Citigroup agreed to pay WorldCom Inc. investors in 2004.
It's good to see the corporate players finally paying for their crimes; the lead plaintiff in the lawsuit was the University of California, whose pension fund suffered heavily with Enron's collapse. California's pension plans lost a staggering $1 billion due to the Enron and WorldCom scandals alone. Citi was deeply involved in both.
But the settlement is unlikely to provoke any soul-searching on Citi's part. The banking giant has over $1.5 trillion in assets. As Southern Exposure revealed in its award-winning investigation into Citi in 2003/2004, this staggering wealth was largely accumulated through shady mergers and predatory and racially discriminatory banking practices that has exploited millions of vulnerable consumers.
With this rich history of scandal, Citi is prepared for events like today's settlement. As Reuters reports,
Citigroup did not admit wrongdoing in agreeing to settle. It said the pre-tax [settlement] payment was fully covered by its existing litigation reserves, which were boosted to $6.7 billion after the WorldCom settlement.
So it's just a drop in the bucket, as investors know well: as MarketWatch reported this morning, "Shares of Citigroup , the nation's largest bank, rose modestly Friday morning after it reached a settlement with Enron shareholders."