Shortly after becoming Governor, in 2007, Deval Patrick made a phone call on behalf of his former employer ACC Capital Holdings. The call was one of reference to Bob Rubin, the CEO of Citigroup. Rubin was in negotiations to purchase the sub-prime mortgage business of ACC, and with his former Clinton Administration colleagues glowing reference, he did. The rest is history.
The added negative financial exposure Citigroup obtained as a result of that phone call almost deatroyed the bank. The practices of ACC Capital Holdings and its subsidiaries, including Ameriquest, helped lead to the global financial crisis of 2008. Deval Patrick, according to the book The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America–and Spawned a Global Crisis, was brought on to help ACC continue these practices. Patrick was, in effect, window dressing on bad ethical behavior.
Today’s Wall Street Journal reports that US Attorney General Eric Holder is on the cusp of prosecuting Citigroup for actions regarding sub-prime mortgages, and the securities that backed them. A significant part of the Citigroup portfolio came from ACC. Deval Patrick was on the Board at ACC while they were packaging bad Mortgage Backed Securities.
Later this month, Citigroup Inc. will meet with department lawyers to discuss a settlement stemming from an investigation into mortgage-backed securities that racked up large losses.
That leaves us with an interesting connundrum. Will President Obama’s Attorney General move to indict one of the President’s key allies? Or will Deval Patrick’s relationship with the president keep him out of the crosshairs?
Time will tell, but I’m guessing the guv gets a pass.