By Pam Martens From Wall Street On Parade

Senator Elizabeth Warren Questioning Fed Nominee Stanley Fischer on March 13, 2014

Stanley Fischer did not get a proper vetting at his Senate Banking confirmation hearing last Thursday to serve as Vice Chairman of the Federal Reserve Board of Governors. Of the 22-member Senate Banking Committee, only five Senators, outside of the Chair and Ranking Member, showed up to question Fischer. Questions should have focused on Fischer’s ties to Citigroup, the serially corrupt mega bank which collapsed into the arms of taxpayers in 2008, requiring a bailout of $45 billion in equity infusions, $300 billion in asset guarantees to stop a run on the bank, and over $2 trillion in below market rate loans from the Federal Reserve to prop it up.

Of the five regular Committee members questioning Fischer, all Democrats, only one, Senator Elizabeth Warren, brought up his ties to Citigroup and the bank’s insidious relationship with government and regulators. We’ll get to that in a moment. First, these are the issues on which the public has been denied adequate information and which the Senate Banking Committee has failed miserably to question.

In a December 20, 2001 employment agreement filed with the Securities and Exchange Commission on behalf of Citigroup by Sanford (Sandy) Weill, Chairman and CEO, and Robert Rubin, former U.S. Treasury Secretary turned Citigroup Board Member, a new Vice Chairman, Stanley Fischer, would join the bank on February 1, 2002 with a lavish compensation package for a man who had never worked in commercial banking.

In addition to medical and other executive perks, Fischer’s employment agreement promised:

$41,666 in monthly compensation;

A $500,000 “sign-on incentive compensation award”;

A guaranteed bonus of $2 million for 2002, payable in cash and restricted Citigroup stock;

A stock option grant of 75,000 shares of Citigroup common stock, subject to Board approval;

And, finally, the bank would place $100,000 in the super-secretive Citigroup Employee Fund of Funds I, LP which lists an address in the Cayman Islands. In addition to fronting the investment for Fischer, the “contribution will be enhanced with company-provided two to one leverage.”

By 2004, Fischer was sitting on 188,748 employee stock options according to his SEC filing that year. According to an SEC filing Fischer made on January 20, 2005, he held a total of 84,791 shares of Citigroup stock, worth approximately $4.08 million at that time. Wall Street On Parade was unable to determine just how much Fischer made in profits on the sale of his stock option awards but it is clear he liquidated or exchanged them because they do not show on his 2005 filing.

Fischer’s employment agreement also contained the same type of caveat that was revealed in the Senate confirmation hearing of Jack Lew, a former Citigroup Chief Operating Officer now serving as U.S. Treasury Secretary. If either Lew or Fischer left Citigroup for a high level position in the U.S. government or a regulatory body, the restricted money Citigroup had put away for them would be theirs to keep.

In Lew’s case, Citigroup, the insolvent ward of the taxpayer, paid Lew $940,000 as a bonus from those taxpayer funds because he joined the U.S. State Department as Deputy Secretary of State under Hillary Clinton, making a few more government hops before landing in his current post as U.S. Treasury Secretary.

Fischer’s employment agreement with Citigroup added a new element: he could also join an “international” governmental body and keep his incentive awards. The agreement read:

“After two years of continuous employment with the Company, in the event that you terminate your employment for purposes of accepting a high level position with a U.S. or international governmental or regulatory body, then your outstanding stock options and restricted stock awards shall vest upon your termination of employment.”

Fischer left Citigroup and immediately became the head of the Bank of Israel, serving in that post until June of last year. But despite the Bank of Israel having a supervisory role over banks operating in the country through its Banking Supervision Department and Citigroup boasting that it has the largest presence of any foreign bank in Israel, Fischer did not exit his Citigroup Employee Fund of Funds I LP in the Cayman Islands.

For more on this story go to:

http://wallstreetonparade.com/2014/03/fed-nominee-stanley-fischer’s-cayman-islands-problem/