mr. bushnell. i want to know from your experience and i understand that it was an extraordinary circumstance. but then there should be a willingness to be extraordinary and your openness and frankness about what would help understand additional top dog. once again, standards that we have. i'm not going to sql what you think of financial regulation moving through congress because there's going to be a whole series of legislation moving through congress. they do want to enter into a discussion. we'll structure, giving you plenty of time if you'd be willing to respond that. and i know you took umbrage with you not thinking things go down. i believe you said that she didn't anticipate so many people walking away from their houses. that was a statement you made. most of them wouldn't call them houses. they call them homes. and they didn't walk away from them. they were dragged away from them. through circumstances they believe that were beyond their control, but somebody other than themselves was at fau

mr. bushnell and other individuals. did you ever -- it was sent to, yes, you, mr. bushnell, and ms. howard. did you ever act on that? >> mr. chairman, i do recollect this, and that -- either i or somebody else, i truly do not remember who, either i or somebody else sent it to the appropriate people, and i do know factually that that was acted on promptly and actions were taken in response to it. >> all right. could you please get us back to us, perhaps, you know, you and/or the people existing at the company today, back to the commission, exactly how citi responded, when it responded, what it did? >> i would be very happy to and i believe legal counsel at citi, in fact, i know they do have that information. >> last set of questions for you before i go on to other members and i will come back at the very tailend but i will ask you a sequence events. both of you said you didn't become aware of the cdo exposures until september, i believe, and as i understand, by looking at documents, by looking at the interviews that you did with staff, that you learned in early september, at which po

mr. bushnell and other individuals. did you ever -- it was sent to, yes, you, mr. bushnell, and ms. howard. did you ever act on that? >> mr. chairman, i do recollect this, and that -- either i or somebody else, i truly do not remember who, either i or somebody else sent it to the appropriate people, and i do know factually that that was acted on promptly and actions were taken in response to it. >> all right. could you please get us back to us, perhaps, you know, you and/or the people existing at the company today, back to the commission, exactly how citi responded, when it responded, what it did? >> i would be very happy to and i believe legal counsel at citi, in fact, i know they do have that information. >> last set of questions for you before i go on to other members and i will come back at the very tailend but i will ask you a sequence events. both of you said you didn't become aware of the cdo exposures until september, i believe, and as i understand, by looking at documents, by looking at the interviews that you did with staff, that you learned in early september, at which po

mr. bushnell.chairman -- >> microphone phone. >> chairman, vice chairman, and members i am pleaseed to participate today. my name is david bushnell. i've submitted a longer statement for the record. i would like to begin my testimony beaddressing what is the single most attributing factor in the writedowns and loss. as you know beginning in 2007 an unprecedented collapse in the united states residential real estate market was the primary instigator in the global financial system. citi was severely impacted by this sudden downturn. in particular, citi started the massive, unanticipated losses in connection with the $43 billion position in a specific asset class exposed to the subprime residential real estate. these were the super senior tranches of collateralized debt. in the fourth quarter, citi took the $14.3 billion writedown. these tranches have come under tremendous scrutiny and rightfully so. it's important to understand how the investments were received at the time. first, the billion-dollar

mr. bushnell made a presentation to the board -- i will verify that -- the essence of this is that -- she a timeline of key events in the subprime market. -- he had a timeline of key events and the subprime market. in 2007, he noted that hsbc had announced a major mortgage delinquencies and losses related to that. on june 12, my birthday, 2007 -- bear stearns asset management announced that their funds were in significant problems. i knew you wanted to know my birthday, mr. vice-chairman. on july 10, s&p and moody's announced significant cdo rating changes in major downgrades. on august 10, bnp paribas froze its funds and countrywide announced significant problems. both you and mr. rubin have said that you became aware in september of problems in the cdo desk. when all of these things happened, why did not the potential of problems rise to the top in the wake of these major announcement? why did it not bubble up? >> mr. chairman, i think you have to go back to the time in question. so much has happened since then that it is a little hard to put yourself back in the time frame of when this

mr. bushnell was known as one of the most sophisticated risk managers in the investment banking communityg, hands-on trading background. as serious issues unfolded in the late summer and fall of 2007, relating to the subprime market, and our lower rated cdo holdings, as well as certain other businesses, such as leveraged lending, our senior management was fully focused on the unprecedented issues the company faced. we had multiple special board and committee meetings to apprise the board members of the issues as they developed in realtime and to solicit their valuable vips and counsel. -- advice and counsel. regrettably, we were not able to prevent the losses that occurred, but it was not a result of management inattention or a lack of proper reporting of information. the lessons learned from this experience are many. but let me address two issues that seem to come up repeatedly when discussing citigroup. is citi too big to fail, and is it too big to manage? these are separate but related questions, as you know. let me start with the latter. i personally do not think citi was too big to m

mr. dave bushnell, the chief financial officer and auditor of citigroup. outlined the business practices that i had witnessed and had attempted to address. i specifically mr. ruben about the extreme risks and unrecognized financial losses that existed within my business unit. i also requested an investigation and i asked this investigation be conducted by officers of the company outside of my business unit. my warnings to mr. ruben involved two different areas within my responsibility. the first one was called delegated flow. the delegated flow channel purchased $50 billion annually of prime mortgages. these mortgages were purchased one mortgage at a time. these mortgages were not underwritten by citi before they were purchased. but the underwriters reviewed a sample of the files after they were purchased. this was to make sure that citi's credit standards were maintained. most of the mortgages were sold to fannie mae, freddie mac or other investors. even those citi did not underwrite these mortgages, citi provided warrants to the investors that purchased

mr. dave bushnell, the chief financial officer and auditor of citigroup. i outlined the business practices that i had witnessed and had attempted to address. i specifically mr. ruben about the extreme risks and unrecognized financial losses that existed within my business unit. i also requested an investigation and i asked this investigation be conducted by officers of the company outside of my business unit. my warnings to mr. ruben involved two different areas within my responsibility. the first one was called delegated flow. the delegated flow channel purchased $50 billion annually of prime mortgages. these mortgages were purchased one mortgage at a time. these mortgages were not underwritten by citi before they were purchased. but the underwriters reviewed a sample of the files after they were purchased. this was to make sure that citi's credit standards were maintained. most of the mortgages were sold to fannie mae, freddie mac or other investors. even those citi did not underwrite these mortgages, citi provided warrants to the investors that purchased

mr. dave bushnell, the chief financial officer and auditor of citigroup. usiness practices that i had witnessed and had attempted to address. i specifically mr. ruben about the extreme risks and unrecognized financial losses that existed within my business unit. i also requested an investigation and i asked this investigation be conducted by officers of the company outside of my business unit. my warnings to mr. ruben involved two different areas within my responsibility. the first one was called delegated flow. the delegated flow channel purchased $50 billion annually of prime mortgages. these mortgages were purchased one mortgage at a time. these mortgages were not underwritten by citi before they were purchased. but the underwriters reviewed a sample of the files after they were purchased. this was to make sure that citi's credit standards were maintained. most of the mortgages were sold to fannie mae, freddie mac or other investors. even those citi did not underwrite these mortgages, citi provided warrants to the investors that purchased them. these rep