Citigroup Scores

If you had any doubt at all about the primacy of Wall Street over Main Street; the utter lack of transparency behind the biggest government giveaway in history to financial executives, and their shareholders, directors, and creditors; and the intimate connections the lie between Administrations — both Republican and Democratic — and the heavyweights on Wall Street, your doubts should be laid to rest. Today it was decided the government will guarantee more than $300 billion of troubled mortgages and other assets of Citigroup under a federal plan to stabilize the lender after its stock fell 60 percent last week. The company will also will get a $20 billion cash infusion from the Treasury Department, adding to the $25 billion the bank received last month under the Troubled Asset Relief Program.

This is not a particularly good deal for American taxpayers, but it is a marvelous deal for Citi. In return for all the cash and guarantees they are giving away, taxpayers will get only $27 billion of preferred shares paying an 8 percent dividend. No other strings are attached. The senior executives of Citi, including those who have served at the highest levels in the US government, have done their jobs exceedingly well. The American public, including the media, have not the slightest clue what just happened.

Meanwhile, more than a million workers in the automobile industry, along with six million mortgagees, and a millions of Americans who depend on small businesses and retailers for paychecks, are getting nothing at all.


Originally published at Robert Reich’s blog and reproduced here with the author’s permission.

69 Responses to "Citigroup Scores"

  1. Guest   November 24, 2008 at 9:37 am

    what can we do!!!!??

  2. Edward A. Downe   November 24, 2008 at 10:07 am

    Indeed we are a speculative economy beholden to finance moguls who dominate both parties. It looks like we have forever missed the opportunity to turn the focus on industry and “making real things” so we can pay back all the money taxpayers are borrowing to bail out the banks? Time for China to take over.

  3. Web Smith   November 24, 2008 at 12:50 pm

    Unlike the auto bailout, this bailout doesn’t allow us to keep jobs or generate commerce plus, they were not adversely affected by the economic crisis. They caused it. After already giving them $25 billion, they are still foreclosing on our homes, charging us loan shark rates on our credit cards, and refusing to loan money to business resulting in more lost jobs and no commerce whatsoever. We should first demand a management change and a plan. What is to guarantee that, after we bail them out, they don’t just go out and do the same things that got them to this point all over again only to have us left holding a lot of worthless stock. Get rid of those corporate jets and the high salaries and bonuses. Otherwise this is just more money after bad.http://ewebsmith.com/gov/BankBailOut.html

  4. Anonymous   November 24, 2008 at 12:54 pm

    You don’t have a heart. You should just reach into your pocket for the extra $24,000 (according to Bloomberg this is the total to date pledged amount for every citizen) and cut back on a few expenses to save this important institution. Eat ramen.

  5. Anonymous   November 24, 2008 at 1:12 pm

    Last week Citi sent out notices that current credit card terms are being renegotiated too. My card, which has a $0 balance is changing from 7% to 15% with default rates going from 23% to 30%. The notice stated one could opt-out of the changes, but if you do so you must pay your card off in full by your card’s current expiration date and your account will then be closed.

  6. Guest   November 24, 2008 at 4:29 pm

    You have to wonder about whether they ( the gov’t) actually has enough money to save these institutions at all – The weight of the CDS is enormous, most of which was not actually insuring mortgages at all. If there really isn’t enough, then all we are doing is buying time prior to the inevitable – not a very smart deal.

  7. Payam   November 24, 2008 at 6:21 pm

    Saving shareholders is a fucking joke. I cannot believe such a weak deal was made. The government should have been receiving preferred shares equal to the amount of writedowns they accept. What bullshit.

  8. Anonymous   November 24, 2008 at 10:24 pm

    the god damn nazi bastards who engineered this should be hung by the balls…starting with that head nazi hank paulson and his incompetent sidekick helicoper ben bernake. may they and their families rot in hell. i’ll be god damned if i’m going to pay my fair share of income taxes after this fiasco. i’ll lie, cheat and steal every fucking dollar i can get my hands on and as a CPA i know how to do it. let them come and get me if they can. i’ll be god damned if i’m going to lay down for this.

  9. Payam   November 24, 2008 at 10:30 pm

    Dear Anonymous,You are right to be angry, but not for the reason you believe. Citigroup needed to be bailed out. The problem is that the deal isn’t a sweetener for the taxpayer, it’s a sweetener for Citigroup and it’s shareholders.It’s true that the government may not need to cover any losses beyond the first $30 billion Citigroup has agreed to cover, but if they do then it’s bullshit. Any book losses due to those assets should have been equal to an equivalent amount of shares in Citi by the government(that is, for every dollar lost by the government is a dollar gained in Citi, which equals share dilution but the shareholders deserve to lose out). Why the government didn’t ask for this simple proposal is beyond anyone’s comprehension.Screw Paulson, he’s no economist, and it’s obvious he’s not looking after the taxpayers’ interest.

  10. Guest   November 25, 2008 at 6:15 am

    there will be more deals like this coming, dont worry.. autos, airlines, home owners… unleash the inflation “holocaust” with dollar going to toilet value

  11. Guest   November 25, 2008 at 9:01 am

    PANDIT THE BAILOUT NUT(I’m a Nut, Leroy Pullins)WilliamBanzai7Sing along link: http://www.youtube.com/watch?v=YqsauoDmgDoBeedle-dee-bah, beedle-dee-bah, beedle-dee-ree-pa-dom…[Chorus]I’m a nut, I’m a bailout nutMy bank won’t ever go bust, whoop-whoop-whoop-whoopThe head on my shoulders is sorta looseAnd I ain’t got the sense to save a giant CDO gooseLord, I am crazy, …I’m Pandit the bailout nutAre your shares under water, if you’re sellin when it rains?Is it shorter to Bahrain, than it is by a plane?Between myself and I, I wonder who’s the dumberIs it hotter in Mumbai, than it is in the summer?[Chorus]I drove my Cadillac to Wall Street to satisfy my lustWheelin’, dealin’, left ol’ Wall Street on a Greyhound busI shouldn’t have allowed all my bankers to get fired while I was thereBut remember only forest fires prevent Bears[Chorus]The subprime crash will be over, when I begin to fightIf it took a dime to go ’round the worldI’d be on the next flightI don’t mind to take the FEDs outIf they don’t mind to go DutchMakes me feel like a Billion bailout dollarsAnd I bet CITI ain’t worth half that much[Chorus]Oh, crazy man! I’m a Nut!Oh, Lordy, Lordy Lordy, LordyI’m crazy, I’m Pandit the Bailout Nut!