Slap on the Wrist: Citigroup vs Toyota

Toyota is facing a fine of over $16 million, maximum allowed by law, by the U.S. federal government which just happens to own two auto companies.

Toyota faces record $16.4M fine in gas pedal recall
(4/6/2010 USA Today)

"The government said Tuesday it has proof that Toyota knew about a safety problem involving sticking gas pedals for four months before it recalled vehicles and said it will penalize the automaker the maximum $16.4 million for the delay.

"That would be a record penalty for foot-dragging. The highest so far: $1 million against General Motors in 2004 for taking too long to fix potentially faulty windshield wipers.

"The law says an automaker must tell the government about a safety defect and begin a recall within five business days after discovering the problem.

""We now have proof that Toyota failed to live up to its legal obligations," Transportation Secretary Ray LaHood said Monday. "Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families. For those reasons, we are seeking the maximum penalty possible under current laws."" [Emphasis is mine. The article continues.]

Gee, remember those huge SUVs made by GM, Ford, and Chrysler that rolled over and injured or killed drivers and passengers? I don't remember exactly but I am sure the automakers were grilled in Congressional hearings and fined, with their engineers jailed for unsafe designs.

And I'm sure the subcontractor who manufactures those gas pedals (or has them manufactured somewhere, probably in China) will be severely punished.

And there's Citigroup, paying a fine of $650,000 to Finra for its stock lending practice from 2005 to 2008 November, when it finally stopped. Damage done, the market crashed. The U.S. federal government also happens to own a huge chunk of Citigroup.

Citigroup Fined $650,000 by Finra for Stock-Lending Violations
(4/6/2010 Bloomberg via Business Week)

"April 6 (Bloomberg) -- A Citigroup Inc. brokerage will pay $650,000 to settle regulatory claims it inadequately supervised a system for loaning customers’ shares to short sellers.

"Citigroup Global Markets gave clients insufficient information about terms of its Direct Borrow Program, in which their hard-to-borrow stocks were pooled to accommodate short selling from 2005 to 2008, the Financial Industry Regulatory Authority said in a statement today. The firm’s marketing materials weren’t “fair or balanced” and lacked key information, the regulator said.

"The program arranged more than 4,000 loans from 2,300 clients, including retail investors, according to Finra. The New York-based bank suspended the program on Nov. 30, 2008, and returned borrowed shares to their owners, the regulator said."

I wonder if Citi even borrowed the shares.

Bear raid attacks using naked shorting, credit default swaps on companies' debts, CDOs, CDS on CDOs (for details on how they are actually used, read about David Einhorn's stragegies here) killed large financial firms, triggered credit crisis, global stock market crash, and global recession that destroyed many trillion dollars of wealth.

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