According to the AP, the Financial Crisis Inquiry Commission circus may get a little interesting today and tomorrow, with former executives of Citigroup slated to appear before the commission:

Former executives of Citigroup Inc. could be in for some surprises when they appear before a panel investigating the roots of the financial crisis.

Commissioners and staffers for the Financial Crisis Inquiry Commission are readying pointed questions for eight former and current Citigroup executives due to testify at hearings that begin Wednesday. Some questions are based on a review of about 2 million pages of documents the commission has obtained, including 1 million pages from Citigroup.

That means witnesses including the bank’s former CEO Chuck Prince and former chairman Robert Rubin may be confronted with their own words, as preserved in e-mails and memos provided to the commission.

The three days of hearings will feature testimony focused on high-risk mortgage lending and the way trillions of dollars in risky mortgage debt was spread through the financial system. The hearing is designed to provide a firsthand accounting of decisions that inflated a mortgage bubble and triggered the financial crisis.
[...]
Wednesday’s witness list includes current and former executives from CitiMortgage, parent company Citigroup Inc., and the division of Citi Markets & Banking that created the most notorious mortgage-backed investments.

Rubin and Prince are due to appear Thursday.

Personally, I’ll be surprised if Rubin faces much by way of embarrassing questions. “The Goldman Sachs Department of the Treasury” is by now a well-entrenched bipartisan concept. Twenty six years at Goldman Sachs, culminating in board membership and a two-year stint as co-chairman, I think, buys you a lot of invulnerability in Washington, D.C. these days.

The NYT has compiled a top-ten list of questions the executives should be asked. One of the things that struck me as I read the list was the discordance between two facts. One is former chief executive Charles O. Prince III’s now notorious statement in defense of Citgroup’s cradle-to-grave* mortgage market shenanigans: “As long as the music is playing, you’ve got to get up and dance.” And the other is the fact that “as part of Citi’s strategy to build up its C.D.O. desk, the firm offered a long-term guarantee to recruit Michael Raynes, a specialist from Deutsche Bank. (“C.D.O.’s were the hive of mortgages that were diced up into layers and sold widely across Wall Street, propelling the debt bubble ever higher until it exploded.”)

Prince’s statement is a pretty clear admission that Citigroup executives were fully aware that the mortgage market had become a house of cards which was going to collapse at any time, but since the music was still playing, and everyone else was still dancing, they had to go on dancing too. So it’s hard to see how he can rationalize offering an employment contract with a long-term guarantee to someone hired specifically for that part of its mortgage business that was going to be the first to go up in smoke.

Incidentally, these are the terms on which Prince parted from the bank:

As a thank-you present for running the bank into the ground, the board gave Mr. Prince a parting gift valued at $12.5 million. Yes, you read that correctly, $12.5 million. That exit bonus was on top of the $68 million he received in stock and options he had accumulated over his many years at the company; a $1.7 million pension; and an office, car and driver for up to five years. In exchange, Mr. Prince signed an agreement not to compete with Citigroup for five years.

Given his obvious talent for running companies into the ground, wouldn’t it have been better for its shareholders if Citigroup had forced him to compete with them for five years?

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* From the AP story:

The panel is using Citigroup as a case study because the bank was heavily involved in every stage of that process. The megabank was a major subprime lender through its subsidiary CitiFinancial. Other divisions of Citigroup pooled those loans and loans purchased from other mortgage companies and sold the income streams to investors.