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Citibank...because zombie banks don't need to sleep. |
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Posted on 11/23/2008 2:19:31 PM PST by jimbo123
Federal regulators were considering a new rescue for Citigroup on Sunday, a step that could mark a third leg of the government’s broader efforts to bolster the nation’s financial industry, according to people briefed on the plan.
Under the proposal, the government would shoulder losses at Citigroup if those losses exceeded certain levels, according to these people, who spoke on the condition that they not be identified because the plan was still under discussion.
If the government should have to take on the bigger losses, it would receive a stake in Citigroup.
(Excerpt) Read more at nytimes.com ...
They must be in trouble. I get only 1 or 2 credit offers a day from them now.
Great, move the losses “off balance sheet”. Isn’t that what Enron did?
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Citibank...because zombie banks don't need to sleep. |
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That flushing sound you hear is another trillion or so tax dollars going down the drain to save yet another corporate failure. I thought when businesses made stupid decisions and wrong decisions, and lost money, thus got in debt and thus had to file bankruptcy and go out of business was what was suppose to happen. Now I guess the Feds bail out everyone and every thing. Hey Feds, I need a few thousand in bail out money myself.
I hear Goldman Sachs is merging with Citigroup......
The new name will be “Sachs in the Citi”......
I believe Citigroup invented “off balance sheet.” Enron was merely a customer.
The thinking is very simple, but people refuse to accept it.
Do the consequences of letting a corporate entity fail outweigh the ideological, moral considerations of a slippery slope, etc.?
The GOVERNMENT would shoulder the losses? How so? Didn't know the government had their own money.
The intent, apparently, was to have the profits from their energy trading (which were enormous and, for the most part, thoroughly legitimate) bail out the losers at an unspecified future date.
Then -- for reasons unexplained yet -- Enron decided to go from a scrupulously honest (if highly arrogant) energy trading firm (I know this for a fact; I dealt with them for years) to one who cut every possible corner. Their trading business went into the crapper, they couldn't cover up their big offshore losers any longer, and POW!...game over.
If you want **criminal** misbehaviour regarding off-balance-sheet transactions, you've no further to look than the US goobermint: social insecurity, funky loan guarantees, the lot. Enron became crooks, sure, but the off-balance-sheet stuff wasn't the problem; the problem was the fraud they committed in the first place.
Way different situation with the Feds. WAY different.
Update 2: Sources with knowledge of the deal say government officials are now getting cold feet over the plan to buy the troubled assets from Citigroup.
Situation is still fluid and people close to the company say some sort of a deal will likely be worked out tonight. one other option being considered now is for the government to put money into citigroup.
The problem with buying the assets from citi is political: people close to the deal know that other firms will line up and ask the government to purchase their troubled assets as well knowing that all brokerage stocks got crushed when treasury secretary hank paulson reversed his plan on the tarp to direct capital infusions to the banks and away from buying troubled assets.
Bottom line: this is very fluid and the situation may change again, but as of now government getting cold feet on plan to buy troubled assets, which leaves direct capital infusion on the table.
http://www.cnbc.com/id/27873985
I wish just for once that these ba$tards would place a name on the payers and losers.
It's not government officials for they will eek out a comfortable living irregardless of financial times.
It's us taxpayers, who at one time WERE the government who are going to shoulder the losses.
Ba$tards, every d#mn one of them!
Vent off....
And in your opinion this is a revelation just of recent political cycle times?
Very compelling post in total however CPB my FRiend.
They (we ) can’t afford a straight rescue - their off the books crap is 10% of the U.S. GDP.
Instead of bailing out Citi and creating an evironment where every company in the US will race to become the next too-big-to-fail risk to the system that requires taxpayer money....
How about the government offer the $$ to a consortium of smaller (not big enough to be systemic risks), solvent banks, credit card issuers, and insurance companies. Let the healthy banks & insurers scoop up Citi’s assets & liabilities for a bargain, let the govt subsidize them to spread the risk around & flush out the crappy assets & take over branch offices & customer accounts uninterrupted, and let Citi’s managment and stockholders go pound salt.
Ya think?
That's exactly how TARP (and pre-TARP Fed+Treasury+FDIC actions) is working, first failures were offloaded with Fed backstops to large banks (JP Morgan, BoA); now smaller banks are in the action - USBank just took ever several smaller banks. IndyMac was deliberate casualty of Schumer so FDIC is taking care of disposal. FDIC is taking over and immediately selling off smaller banks that are on the verge of capital requirements failure.
GSEs, AIG and Citi are too big to do that in one swoop, so they may need to be "taken over" by the government to allow for the time and reduction in panic to liquidate them, and get the best price for the chunks, possibly bundling good pieces (as an incentive) with some poor ones that would be difficult to get rid of standalone. And government has some luxury to wait for better deals.
Fortunately, Citi seems to be the last large bad apple. Smaller banks are not a systemic problem, as you correctly implied.
took ever = took over
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