Audit Notes: seaside villas, paywall past, Citi fraud

Line of the day goes to Bloomberg News for this gem from Robert Benmosche, CEO of government-owned AIG (emphasis mine):

American International Group Inc. (AIG) Chief Executive Officer Robert Benmosche said Europe’s debt crisis shows governments worldwide must accept that people will have to work more years as life expectancies increase.

“Retirement ages will have to move to 70, 80 years old,” Benmosche, who turned 68 last week, said during a weekend interview at his seaside villa in Dubrovnik, Croatia. “That would make pensions, medical services more affordable. They will keep people working longer and will take that burden off of the youth.”

Some people work from their seaside villas. Some people work scrubbing the floors of those seaside villas.

— Here’s what the Washington Post’s then-chief of digital-media was thinking about paywalls a decade ago, in an interview with I Want Media (emphases are mine):

IWM: What’s your opinion of charging for online content? Four rather small newspapers in Florida announced recently that they’re going to start charging for access.

(Christopher M.) Schroeder: I believe that building, grabbing and sustaining an audience should be the focus of any Web site, and that’s where the market will go. Smaller newspapers sometimes look at their online site almost as a circulation tool. Their view is: you pay for our newspaper, so you pay for our online edition.

But the focus should be on the Internet on the Internet’s terms. What unique audiences are you reaching that perhaps you haven’t reached before? We should look for ways to make those audiences larger as opposed to creating something that is merely ancillary to existing operations.

I truly think that next year the Internet story people will be talking about is the efficacy of online advertising. There are times of day when you can reach people with your ad information on a regular basis, i.e., at the desktop, which you couldn’t do before. People are on-task when they’re looking at their screens. They’re not getting up and making a sandwich when the ads come on. That’s where the focus should be.


— Make sure you read Bob Ivry’s piece in Bloomberg Market on Citigroup whistleblower Sherry Hunt, who exposed how the bailed-out bank was committing mortgage fraud as late as this year:

By 2006, the bank was buying mortgages from outside lenders with doctored tax forms, phony appraisals and missing signatures, she says. It was Hunt’s job to identify these defects, and she did, in regular reports to her bosses.

Executives buried her findings, Hunt says, before, during and after the financial crisis, and even into 2012.

In March 2011, more than two years after Citigroup took $45 billion in bailouts from the U.S. government and billions more from the Federal Reserve — more in total than any other U.S. bank — Jeffery Polkinghorne, an O’Fallon executive in charge of loan quality, asked Hunt and a colleague to stay in a conference room after a meeting.

The encounter with Polkinghorne was brief and tense, Hunt says. The number of loans classified as defective would have to fall, he told them, or it would be “your asses on the line.”

Hunt says it was clear what Polkinghorne was asking — and she wanted no part of it.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,