The Citi bailout has caused me an acute case of seditious mood disorder. 1) What makes the Fed think that they can make policy like this? I was angry about this with BSC. GWB and Treasury decided that the had to consult Congress about the previous bailout. They did it kicking and screaming, but Treasury raises capital through taxation so ultimately they decided they needed to run it past the legislature to pony up huge bucks. The Fed raises capital by causing inflation but its job is to run a sustainable responsible monetary policy. I guess now a resposnible monetary policy includes creating enough capital in debasing inflationary ways to pay off Citi’s bad debt? 2) Why can’t we get some MTM accounting from the govt? The govt is giving Citi essentially (perpetual, I think) CDS protection on some big tranche of their assets. Disclose the assets and lets get bids on it. If we are giving away something worth $30B, the taxpayers (or voters or someone) deserves to know. Hiding behind the “we don’t really know what it will be worth” is nonsense 3) We already did a bailout that seemed to include Citi I must have misunderstood the previous bailout package. First, it was for $700B and Citi seemed to be one of the poster children for why we need a bailout. Next, Paulson says that $350B “stabilized markets” so he is going to spend the remaining $350B on whatever he wants (I didn’t understand how that followed from the bill I read, so maybe that’s where I lost touch). Then, the Fed (not the Treasury) says that Citi gets its own bailout. Pandit says “We appreciate the gov’t efforts to stabilize markets”. Somebody here is lying and I want them to go to jail. 4) Bailing out assets really bothers me Suppose that Hurricane Joey slams into the Gulf Coast and levels everything from Houston to Tampa. It would work for me if the govt stepped in and said that we had some interest in protecting the insurance industry from being completely wiped out by their liabilities. Ultimately, a purpose of society is to limit the impact of liabilities so that people are not buried inextricably. That’s why we have bankruptcy, corporations, LLC’s, etc. Limiting the downside on valuable assets really bothers me. These are not hurricane losses; these are underperforming assets. If Citi doesn’t like those assets, I will take them. 5) WTF is equity for these days? C is up 60%. They admit that they are insolvent and their equity is up 60%. I must have missed that part in my CFA studies. 6) Did Sarah Palin have anything to do with this? I don’t think so, but if I include her in these discussions it usually gets a few people going.
I think what I just read implies that to make Joey happy, we’ll have to see another Sarah Palin interview, with Hank Paulson going into a turkey grinder head first.
I’m not sure that would help. It would be like eating one potato chip when you are hungry.
Maybe so, but the hungry guy seldom turns down the potato chip on principle.
I won’t turn it down, but it wont satisfy me either. I want resposnible govt back.
It is all manipulation…
I think the Constitution of the United States of America has been amended, to include: “… Government shall also speculate on Wall Street in order to enrich the tax payer wealth. This includes taking equity stakes in financial institutions” This will not end well.
I am angry angry angry… why is Pandit man still there!!!. Somebody has too tell him the meaning of the word “resignation”. And Geithner will be the next treasury, so these Bailouts will be in full force in next 4 years. Change is BS.
JoeyDVivre Wrote: ------------------------------------------------------- > I won’t turn it down, but it wont satisfy me > either. I want resposnible govt back. Wait. You mean we actually had that at one point in our lifetime? The guys who were afraid of being lynched by the British, but proceeded anyway… now that’s responsible gov’t. I think Obama believes most of what he says, but the brick wall of BS in Washington is very tall, long and built with lots of special interest money. I hope for the same thing, but I have a healthy dose of skepticism.
Yeah whats up with citi equity?
Maybe Hank will negotiate some preferreds with a fat 1% dividend for us taxpayers.
dlpicket Wrote: ------------------------------------------------------- > JoeyDVivre Wrote: > -------------------------------------------------- > ----- > > I won’t turn it down, but it wont satisfy me > > either. I want resposnible govt back. > > Wait. You mean we actually had that at one point > in our lifetime? > All govts (like all people) have their irresponsibilities. There is no govt in the history of the US that has behaved like the govt is behaving now. Read up on how the Carter Administration handled the Chrysler bailout and contrast it to the way we just handled the Citi bailout. Or for an even more direct comparison check out how we bailed out Citi with Brady Bonds during the Reagan years with how we are bailing them out now. Both were much better conceived and executed. > The guys who were afraid of being lynched by the > British, but proceeded anyway… now that’s > responsible gov’t. > Well, that govt was deeply divided about whether states should be able to arm themselves against other states, not very divided about slave ownership, put people like me in jail for sedition, etc. so I’m not sure I believe that. > I think Obama believes most of what he says, but > the brick wall of BS in Washington is very tall, > long and built with lots of special interest > money. I hope for the same thing, but I have a > healthy dose of skepticism.
This is complete BS!! What the hell C’s equity would go up?? How the heck this is different from any other bailout (AIG, Freddie and Fannie).
wtf mane I wish the gov’t would just play the ‘tough love’ parent it should be to these companies
I think C’s equity should go up based on this deal. The company got $20B and gave up $7B in preferred and (I dunno) < $1B in warrants. And they got a massive free insurance policy on their assets. Sounds good to me if I’m a shareholder, but why should we do this and why aren’t other people jumping on the sedition bandwagon? We have a national interest in C surviving (maybe). We do not have any interest at all in making sure that C shareholders do not get wiped out to help pay for it. The company has $30B in equity and we are giving them money? What BS! Principle #1: If we give them $X, I want securities that are at least notionally worth $X. If we give them $20B, I want $20B in preferred shares. Principle #2: Warrants aren’t part of any bailout because the govt doesn’t own stock. We certainly don’t want to give govt’s incentives to raise vol. Principle #3: We value everything and add it to the preferred. If that insurance policy is worth $30B, then we get another $30B in preferred. Principle #4: Accounting rules change for companies that are subject to bailouts. If the taxpayers are insuring your assets, those assets have to be disclosed to the level that a competent analyst can value the insurance. If you have privacy issues with some assets, you need to eat those. Otherwise, I want www.citibailout.gov/trashassets to give me a downloadable list. Principle #5: If I’m giving you an insurance policy on your portfolio, you can’t change your portfolio because I’m not insuring anything you happen to want to buy (imagine if C went out and bought tons of S&P 1000 calls for which the govt picked up all losses beyond 10%). Principle #6: No bonuses beyond guarantees at C. Sorry that CSK worked hard, but he took on risk and got mushed.
“Somebody here is lying and I want them to go to jail.” West coast yo, just rolled into the office after a nice weekend. What the hell is going on out there! My apologies for being crude, but either wall street is blowing the feds or vice versa. In any event as a taxpayer I sure ain’t on the receiving end.