Banksters: "Citibank Was About To Fail..."
"SIGTARP:
Citibank Was About To Fail, But How About Now?"
by Karl Denninger
by Karl Denninger
"Fascinating things in this report... Among them:
• There was $500 billion in overseas (and presumably uninsured) deposits in Citi in late 2008. That was the "fear factor" that (primarily) led to their bailout.
• The loan portfolio that was covered had a "projected" (by Citi) final loss of about $29 billion. Here's the problem - we don't know what happened to that. Some of it was probably covered by reserves, but not all, and as far I know it wasn't written down. So where is that projected loss now?
• The "bailout" and "guarantee" was sold to the market as a intentional deception. How many more lies were we sold during this period of time?
• There was $500 billion in overseas (and presumably uninsured) deposits in Citi in late 2008. That was the "fear factor" that (primarily) led to their bailout.
• The loan portfolio that was covered had a "projected" (by Citi) final loss of about $29 billion. Here's the problem - we don't know what happened to that. Some of it was probably covered by reserves, but not all, and as far I know it wasn't written down. So where is that projected loss now?
• The "bailout" and "guarantee" was sold to the market as a intentional deception. How many more lies were we sold during this period of time?
An FRBNY official noted that the timing for an agreement was crucial, as Citigroup had to announce that the Government was guaranteeing the tail risk, or unknown losses, of the assets before the markets opened in Asia between 7 p.m. and 8 p.m. EST. According to the official, the term sheet worked by “convincing the skittish market that the Federal Government was taking the risk, even though the risk really remained with Citigroup,” because the Citigroup loss position was greater than anticipated losses.
Finally, and perhaps most-importantly:
Second, the Government’s actions with respect to Citigroup undoubtedly contributed to the increased moral hazard that has been a direct byproduct of TARP. While the year-plus of Government dependence left Citigroup a stronger institution than it had been, it remained, and arguably still remains, an institution that is too big, too interconnected, and too essential to the global financial system to be allowed to fail. Indeed, a senior FRBNY official told SIGTARP in January 2010 (before the passage of the Dodd-Frank Act), that Citigroup was then still “too big to fail,” and that if history repeated itself there is “no question we would do it again... with a similar or different program.” This, despite Dodd-Frank requiring that any institution that is such be broken up if it "threatens financial stability." You, of course, cannot do this when the entire system is coming apart - you have to do it when it's not.
So why hasn't Citibank been broken up, since everything is now allegedly "stable"? Funny how the law isn't followed when it's a big bank that's the problem."
Finally, and perhaps most-importantly:
Second, the Government’s actions with respect to Citigroup undoubtedly contributed to the increased moral hazard that has been a direct byproduct of TARP. While the year-plus of Government dependence left Citigroup a stronger institution than it had been, it remained, and arguably still remains, an institution that is too big, too interconnected, and too essential to the global financial system to be allowed to fail. Indeed, a senior FRBNY official told SIGTARP in January 2010 (before the passage of the Dodd-Frank Act), that Citigroup was then still “too big to fail,” and that if history repeated itself there is “no question we would do it again... with a similar or different program.” This, despite Dodd-Frank requiring that any institution that is such be broken up if it "threatens financial stability." You, of course, cannot do this when the entire system is coming apart - you have to do it when it's not.
So why hasn't Citibank been broken up, since everything is now allegedly "stable"? Funny how the law isn't followed when it's a big bank that's the problem."
- http://market-ticker.org/
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So, Good Citizen, the moral of the story is this: if you're a Wall Street bankster you can break all the laws you want with impunity, and be "rescued" financially by the government- meaning YOU- which happened to the tune of a cool $23 TRILLION of your favorite dollars. You, meanwhile, get nothing while you struggle to save your home from foreclosure, pay those 30% interest rate credit cards, hope you keep your job, and watch helplessly as it all goes down the drain. "Equal Justice Under Law" is carved onto many court houses... don't you believe it for a second. - CP
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