"No warning can save people determined to grow suddently rich" - Lord Overstone

  • 1 hour Gold Bulls, Brace Yourselves – Fed Hikes Are Coming!
  • 4 hours Stocks Fail to Hold Gains, But Still No Correction
  • 6 hours Cryptojacking: A New Threat Vector To Critical Infrastructure
  • 23 hours Why The Next Oil Boom Will Be Fueled By Blockchain
  • 1 day 5 Things Investors Should Know About China this New Year
  • 1 day Is The South Korean Crypto-Drama Finally Over?
  • 1 day Miners’ Rally? What Rally? Watch Out for More Fake Moves!
  • 1 day Four Percent 10-year Note Yield Will Be a Floor Not a Ceiling
  • 1 day The End Is Near
  • 2 days 5 Record Breaking Gemstones Even Billionaires Can’t Buy
  • 2 days Irredeemable Currency De-tooths Savers
  • 2 days CFTC Offers Bounty For Crypto Pump And Dump Whistleblowers
  • 2 days Have You Been Getting Run Over By This Stock Market Action?
  • 2 days Decision Time
  • 2 days 1 Week Later, Risk Remains ‘On’ as 2 of 3 Amigos Ride On
  • 3 days The Most Polarized Commodity Ever
  • 3 days Commodity Coins and Us: What To Expect From The "Tokenization of Everything"
  • 3 days U.S. Dollar Bull and Bear Markets
  • 3 days GLD May Not Yet Be Ready To Break Out
  • 5 days Permanent Market Support Operations
John Rubino

John Rubino

John Rubino edits DollarCollapse.com and has authored or co-authored five books, including The Money Bubble: What To Do Before It Pops, Clean Money: Picking Winners…

More Info

Citi: No Longer the Dumbest Bank -- Now the Most Evil

Back in December there was a flurry of press around the passage of a banking bill that was 1) reportedly written by Citigroup and 2) put taxpayers on the hook for over-the-counter derivatives, obscure financial instruments that periodically blow up and in which Citi had a big position. Distrustful cynics like Massachusetts Senator Elizabeth Warren claimed to see a connection:


Video: Senator Warren on Citigroup and its bailout provision

But most other people, especially those who remember how enthusiastically Citi blundered into the previous decade's housing bubble just in time to be nearly-bankrupted by it, tended towards a more charitable explanation: Citi wasn't smart enough to manipulate the legislative process, so whatever they were up to it was probably accidental.

But then Zero Hedge published this, which calls our preconceptions about Citi's stupidity into question:


Is Citi the next AIG?

This fascinating piece of investigative journalism is too long and complex to excerpt here. You have to read the whole thing because every paragraph and every chart is a new bit of damning evidence. But for those who refuse to read it (though seriously, you should) I'll summarize the high points:

In the third quarter, the part of Citi that is insured by taxpayers went on a derivatives writing binge, taking its total exposure to $70 trillion (with a "t"). Then it wrote a draft of new legislation that would delete part of an old law forbidding the government from bailing out banks' derivatives positions. Then it lobbied successfully to get its language written into the latest banking bill. Then it revealed its new derivatives portfolio to the world.

In asking if Citi is the next AIG, Zero Hedge is referring to the previously-obscure insurance company that had somehow become one of the world's biggest derivatives players just in time for that market to blow up in 2008. Had it not been bailed out with several trillion dollars of taxpayer cash it would have taken down Goldman, Citi, JP Morgan Chase and pretty much the entire rest of the global financial system. Zero Hedge then goes on to speculate that Citi might be covering up some kind of company-threatening position that will, in the near future, require the aforementioned taxpayer bailout.

If all this is true, then Citi deserves serious props for adaptability. They screw up, and instead of immediately melting down they hatch an imaginative plan to hijack what's left of the federal government, implement it over the public objections of high-profile senators, and then kind of brag about it by announcing their new status as America's biggest derivatives player.

Have to admit it, this is the behavior of a highly intelligent entity. Evil, yes, but smart.

 

Back to homepage

Leave a comment

Leave a comment




Don't Miss A Single Story