But the head of an investigative panel pressed them on why they didn't monitor the bank's growing risk-taking and why it wasn't brought to their attention earlier despite frequent management meetings.
The high-risk securities were deemed safe, and they were not discussed at those meetings before September 2007, Rubin said. He was testifying at a hearing by the panel investigating the roots of the financial crisis.
Rubin, Prince and other former Citigroup executives have been sharply criticized for allowing heavy investments in high-risk mortgage securities. Citi was a major subprime lender.
They said they didn't learn until September 2007 that the bank had held onto the investments composed of repackaged mortgage bonds. The next month, Citigroup publicly estimated it would lose $8 billion to $11 billion in the fourth quarter that year from those securities.
A $43 billion bet "may sound like chump change" for a company of Citigroup's size, but it was a significant exposure to risk, the chairman of the Financial Crisis Inquiry Commission, Phil Angelides, told Rubin and Prince.
Rubin, a former Treasury secretary, insisted: "There isn't a way ... that you're going to know what's in those (bank) position books," he said. "You really are depending on the people who are there to tell you."
Rubin and Prince said the Citi executives who piled up the risky securities on the bank's books thought, as did others on Wall Street, that they were safe from default. They had received triple-AAA ratings from credit rating agencies.
Prince, who resigned in November 2007 when the bank acknowledged stunning losses from the high-risk securities, began his testimony with a mea culpa.
"Let me start by saying I'm sorry," Prince said. He is "deeply sorry," he said, for the failure of Citigroup's management, starting with him, to foresee the crisis that wreaked devastation on the U.S. economy and ordinary Americans.
Rubin said "We all bear responsibility for not recognizing this, and I deeply regret that."
Critics have said Rubin, with his vast experience on Wall Street and as Treasury chief in the Clinton administration, should have picked up on the warning signs of the crisis and taken a more active role in preventing Citigroup's debacle.
New York-based Citigroup was one of the hardest-hit banks during the credit crisis and the recession. It received $45 billion in federal bailout money - one of the biggest rescues in the government's program.
As borrowers defaulted, Citibank's losses reached nearly $30 billion on some portions of collateralized debt obligations, or CDOs. CDOs are complex financial instruments that combine various slices of debt.
"Those losses were a substantial cause of the bank's financial problems and led to the assistance from the U.S. government," Rubin said Thursday.
Prince said he wasn't aware of decisions being made on the bank's trading desks to keep on its books the "super senior" CDOs. Still, he says, given that they were widely perceived as having a low risk of default, "it is hard for me to fault the traders who made the decisions."
"Regrettably, we were not able to prevent the losses that occurred, but it was not a result of management or board inattention or a lack of proper reporting of information," Prince said. He said multiple meetings were held to inform board members of developing problems and to solicit their advice.
The inquiry commission was created by Congress to delve into the causes of the financial crisis. The three sessions this week are focused on high-risk mortgage lending and the way trillions in risky mortgage debt was spread throughout the financial system. The goal is to provide a firsthand accounting of decisions that inflated a mortgage bubble and triggered the financial crisis.
Citigroup is being examined as a case study because it was heavily involved in each stage of the process. The bank was a major subprime lender through its subsidiary CitiFinancial. Other divisions of Citigroup pooled those loans and loans purchased from other mortgage companies and sold the income streams to investors.
When Citigroup announced the estimated losses of up to $11 billion in November 2007, Prince resigned, Win Bischoff became acting CEO, and Rubin stepped in as chairman, helping Citi raise billions in capital to shore up its sinking finances.
Rubin came to Citigroup as a "senior counselor" in 1999. He had worked for 25 years at Wall Street powerhouse Goldman Sachs & Co., rising to co-CEO, before becoming President Bill Clinton's chief economic adviser in 1993 and Treasury secretary two years later.
Richard Bowen, a former mortgage executive at Citigroup, told the Financial Crisis Inquiry Commission Wednesday that the bank and ignored his warnings about the coming financial crisis.
Bowen said he raised concerns about mortgage risk starting in 2006. He said he sent an e-mail about it to Rubin and others in November 2007.
Bowen sent weekly messages to managers raising concerns about his group's risk management. But he wrote to Rubin and other executives in 2007, "These breakdowns have not been communicated to or recognized by" Citi's top audit or finance executives.
Bowen said at the hearing that he doesn't know whether any executives acted on his warnings about the bank's purchase of suspect mortgages.
In testimony to the Financial Crisis Inquiry Commission, Bowen said he discovered in mid-2006 that more than 60 percent of the mortgages bought and resold by subprime subsidiary Citifinancial Mortgage didn't meet Citigroup's underwriting standards.
Bowen was a chief underwriter for the division. He was responsible for loans bought from other lenders. Many of these loans were bundled and sold as complex investments.
Citigroup disputed his account. Spokeswoman Molly Meiners said in a statement that the issues Bowen raised were "promptly and carefully reviewed when he raised them and corrective actions were taken."
Bowen's testimony came on the first of three days of hearings by the FCIC. Earlier Wednesday, Alan Greenspan in the years leading up to the crisis. As he has in the past, Greenspan disputed critics who say he kept interest rates too low for too long, encouraging risky lending.