Blog on the Run: Reloaded

Wednesday, April 8, 2009 9:46 pm

… and they would deserve it

A couple of posts down, I speculated that Citi may be a takeover target for the Feds. Here’s some evidence that it should be: the apparent, and utter, cluelessness of its new chairman:

Citigroup Inc.‘s new board chairman, Richard Parsons, said financial institutions are being targeted for creating the nation’s financial crisis, but they aren’t the only ones responsible.

“Everybody participated in pumping up this balloon. Now the balloon has deflated,” he said Monday. “Everybody, in reality, has some part of the blame. But it’s much more in the culture to find a villain and vilify the villain.”

Besides banks, there was reduced regulatory oversight, loans to unqualified borrowers were encouraged and people took out mortgages or home-equity loans they couldn’t afford. …

” … to demonize the bankers alone for creating this financial meltdown is both inaccurate and shortsighted.”

Now, it is technically true that all these factors contributed to the now-deflated balloon. But it is also true that the most damage has been done by bank holding companies like Citi and other nonbank (i.e., essentially unregulated) financial institutions, who got themselves way overleveraged and then looked to the taxpayers for a bailout.

And their mistakes weren’t limited to overleveraging themselves: A lot of lenders committed outright fraud.

But here’s my favorite part:

“Any time you have these financial crises, the bad news seems to overwhelm all the good news,” he said. “But within the envelope, Citigroup is still a very powerful, vibrant, highly profitable, good bank.”

That little gem comes after this little bit of the story:

Citigroup has suffered five straight quarters of losses, including $8.29 billion in the fourth quarter alone.

It has received $45 billion in bailout aid, and the government also agreed to cover a portion of losses on hundreds of billions of troubled assets and loans as Citi looks to right itself.

“Vibrant, highly profitable”?? Heck, forget his disingenuous spin. He should be fired because he can’t even count.

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