Citi tells how it lost $50bn

CITIGROUP took advice from outside consultants on moves that led it to lose $50bn (32.8bn) on complex debt securities, a former executive told the Financial Crisis Inquiry Commission yesterday.

Thomas Maheras, a former co-head of Citi’s capital markets team, said the bank decided to up its exposure to certain parts of the fixed income universe – including mortgage-backed securities – after commissioning a study by a top consulting firm.

In written testimony, Maheras said senior management was convinced instruments like collateralised debt obligations (CDOs) “offered opportunities for long-term growth”.

A second senior figure at Citi, Richard Bowen, told the commission he warned the beleaguered bank’s risk team about exposure to toxic loans as early as 2006. Citi was infamously slow to begin scaling back its allocation, waiting until late 2007.