This morning Chuck Prince, former CEO of Citigroup, offered up a defense of his company's risk management, but also said that the Fed's regulation of Citigroup was sufficient:

I would personally meet with regulators on a frequent basis, at least once a quarter, sometimes on a private basis. ... I think the regulators also mistook the ultimate safety of the CDO positions. I don't think it was a situation where the regulators weren't active. They certainly felt active from the company's standpoint. I don't think it was a situation where the regulators didn't know what was going on. As I said, they lived with us day by day by day. The mistake that was made by all of us was also made by regulators. I don't think it was a failure of regulatory involvement with the company. (Emphasis added.)

That's interesting, because yesterday the Financial Crisis Inquiry Commission disclosed the results of a study by other Federal Reserve banks, finding that New York Fed regulators failed to provide adequate oversight of Citigroup. In 2007 and 2008, the company sustained losses so severe it needed three taxpayer-financed bailouts to avoid collapse. And as we've reported, even current Treasury Secretary Timothy Geithner has acknowledged that during his tenure as president of the New York Federal Reserve, his supervision of Citigroup should have been more effective.

This isn't the first time Citigroup has defended its regulators. In May 2008, CEO Vikram Pandit said Citigroup was in "perfect agreement" with Fed regulators about risk and capital levels. It was what one Citi executive called "kind of an unusual symmetry."

... And what we're now finding, by the Fed's own admission, was lax regulation.