Citigroup on The Huffington Post

Citigroup Hacked, FBI Reportedly Investigating

2009-12-22T08:08:49Z

WASHINGTON — The FBI is investigating a hacker attack on Citigroup Inc. that led to the theft of tens of millions of dollars, The Wall Street Journal reported Tuesday. The bank strenuously denied the report.

Citing anonymous government officials, the Journal reported that the hackers were connected to a Russian cyber gang. Two other computer systems, at least one of connected to a U.S. government agency, were also attacked.

TARP Repayments Mean Huge Fees For Bailed-Out Banks: Andrew Ross Sorkin

2009-12-22T08:04:30Z

Here's what the post-bailout bonanza means for all the banks that helped find investors for the new shares: Bank of America's $19.3 billion offering generated $482 million in fees; Citigroup's $17 billion offering resulted in $425 million in fees; and Wells Fargo's $12.2 billion offering led to $275.6 million in fees. (The banks paid themselves roughly 2.5 percent of the offering price.)

Citigroup's Warrants Provide Low Returns For U.S. Taxpayers

2009-12-21T11:43:52Z

Warrants the U.S. holds in Citigroup Inc., once the most valuable bank in the nation, may provide the lowest return for taxpayers who stepped in with $45 billion to save the company when no one else would.

Andrew Ross Sorkin: Morgan Stanley, Goldman Sachs Were On The Verge Of Collapse Last Fall (VIDEO)

2009-12-21T11:30:24Z

Don't buy the assertions that banks like Goldman Sachs would have survived the financial crisis without a taxpayer bailout.

According to Too Big To Fail author and New York Times scribe Andrew Ross Sorkin, who sat down with Newsmax TV recently, the world was dangerously close to the "financial abyss" last fall. So close, in fact, that both Morgan Stanley and Goldman Sachs were very close to going belly up, Sorkin argues.

After Lehman Brothers collapsed, Sorkin says, there was a widespread fear on Wall Street that Morgan Stanley would be the next to go under. Goldman Sachs CEO Lloyd Blankfein was reportedly so spooked that he called up Morgan Stanley chief John Mack and urged him to "hang on, because I'm thirty seconds behind you."

Sorkin says that Hank Paulson, who was Treasury Secretary at the time, and then-New York Fed President Timothy Geithner -- nicknamed "e-harmony" for his matchmaking efforts -- spent the weekend brainstorming potential mergers for the vulnerable banks. One possibility called for the absorption of Goldman Sachs by Citigroup; another for the marriage of Morgan Stanley to JPMorgan.

At the time, Sorkin added, policymakers feared that if major financial institutions continued to domino into bankruptcy, even non-financial corporations like General Electric could be vulnerable.

WATCH Sorkin's interview:

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Geithner: TARP Repayments Don't Hurt Bank Lending Ability

2009-12-19T04:41:39Z

Treasury Secretary Timothy Geithner said U.S. banks aren't hurting their ability to lend as they repay the Troubled Asset Relief Program and back away from government assistance.

"By replacing the Treasury investments with private capital, banks have stronger capital positions, and will be in a better position to expand lending...

Michael Winship: Happy Holidays from America's Banks

2009-12-18T15:27:28Z

Never mind Barack Obama's Audacity of Hope. It's the audacity of the banks that takes your breath away. Mean old Mr. Potter in "It's a Wonderful Life" seems like Father Christmas by comparison.

A recent report that Citigroup and Goldman Sachs may have received preferential treatment getting doses of the swine flu vaccine was enough to give Ebenezer Scrooge the yips. Then came news that in order for us to get back the taxpayer bailout money we loaned them, Citigroup is receiving billions of dollars in tax breaks from the IRS.

And there's a new study this week, "Rewarding Failure," from the public interest group Public Citizen, revealing that in the years leading up to the financial meltdown, the CEO's of the 10 Wall Street giants that either collapsed or got huge amounts of TARP money were paid an average of $28.9 million dollars a year.

In 2007, that amounted to 575 times the median income of an American family. Now, thanks in part to the banks' monumental malfeasance that led to our economic swan dive, food stamps are now being used to feed one in eight Americans, and a quarter of all the kids in this country. A new poll from the New York Times and CBS News reports that more than half of our unemployed have borrowed money from friends and relatives and have cut back on medical treatment.

The Times wrote that, "Joblessness has wreaked financial and emotional havoc on the lives of many of those out of work... causing major life changes, mental health issues and trouble maintaining even basic necessities."

Yet according to the non-profit Americans for Financial Reform the reported $150 billion that Wall Street is paying itself in compensation and bonuses this year would be enough to solve the budget crisis of every one of the fifty states or create millions of jobs or prevent all foreclosures for four years.

All of this wretched excess is occurring as more and more people can't afford a roof over their heads. Foreclosures were up another five percent in the third quarter -- 23 percent more than a year ago. Fewer Americans are willing to buy foreclosed properties, and the Obama administration's foreclosure prevention plan has been a bust so far - way too timid, critics say, and many of the banks won't play ball, refusing to negotiate in good faith with homeowners desperate to hold on.

We got a first hand look at the crisis this week, when thousands lined up at the Jacob Javits Convention Center just a few blocks from our Manhattan offices to attend a mortgage assistance event sponsored by the non-profit Neighborhood Assistance Corporation of America (NACA). So many showed up for this leg of the "Save the Dream Tour" that on many days, staff and volunteers stayed to help until one in the morning.

NACA has had success getting homeowners and banks together to work out a deal to prevent foreclosure. But the big banks' return to the government of the TARP bailout money with which we underwrote them over the last 14 months is a mixed blessing -- great to have the cash returned so quickly, terrible because any leverage Washington held over the banks because of the loans virtually vanishes with the payback. They're back in the saddle and not inclined to be of much assistance helping anyone else out, especially those in mortgage trouble.

As Andrew Ross Sorkin of the New York Times wrote in the wake of President Obama's Monday meeting with Wall Street's top guns (three of whom failed to show up because of airport delays), "Executive compensation, leverage limits and lending standards were all issues that Washington said it planned to change -- and when the taxpayers were the shareholders of these firms, it probably could have done so. But now the White House has been left in the position of extending invitations, rather than exercising its clout. And in the figurative and literal sense, it is getting stood up."

Afterwards, Obama said, "The problem is there's a big gap between what I'm hearing here in the White House and the activities of lobbyists on behalf of these institutions or associations of which they're a member up on Capitol Hill."

That's putting it mildly. This week, the American Bankers Association sent out an update and "call to action" memorandum crowing over its success watering down the bank reform bill that was approved by the House and urging its members to beat back similar legislation in the Senate. Self-righteously, it concludes, "As one of your New Year's resolutions, please vow to do everything in your power to show, and to have your colleagues in your bank show, your Senators the right path to true reform."

It helps when the right path is paved with silver and gold. As "Crossing Wall Street," a November report from the Center for Responsive Politics notes, "The finance, insurance and real estate sector has given $2.3 billion to candidates, leadership PACs and party committees since 1989, which eclipses every other sector...

"The financial sector has also been a voracious lobbying force, spending an unprecedented $3.8 billion since 1998, while sending an army of lobbyists to Capitol Hill to make its case. That's more money than any other sector has spent on influence peddling. Not even the health care sector, which spun up a lobbying frenzy this year over health reform, has spent more."

The banks are making a list and checking it twice. And lest we forget, during his run for the White House, the finance sector filled Barack Obama's stocking with $39.5 million dollars worth of campaign contributions, more than any other presidential candidate.

God bless us, every one!

Michael Winship is senior writer of the weekly public affairs program Bill Moyers Journal, which airs Friday night on PBS. Check local airtimes or comment at The Moyers Blog at www.pbs.org/moyers. Research support provided by producer William Brangham and associate producer Katia Maguire.

Trading Profits Up 11 Percent For Banks; JPMorgan Chase Leads The Way

2009-12-18T13:27:04Z

Despite controversy surrounding the financial instruments known as derivatives -- and legislation that might finally start to regulate them -- the nation's top five banks are, for now, maintaining their stranglehold on the derivatives market, accounting for 97 percent of the $204.3 trillion in total volume last quarter, the Office of the Comptroller of the Currency reported Friday.

The lobbyists for the nation's biggest banks are fighting ferociously against legislation that would regulate the over-the-counter derivatives market. What is now essentially a market in which traders deal directly with one another would instead be diverted to public exchanges or other central facilities, though major loopholes remain.

Overall, the nation's banks saw an 11 percent increase in their trading revenue last quarter, turning a $5.7 billion profit -- their fourth-best quarter ever.

JPMorgan Chase led the way in the third quarter, making nearly $3.1 billion off its trading and derivatives activity, a 60 percent increase from the previous quarter. The banking behemoth has earned more than $8.1 billion trading thus far this year, already eclipsing its year-end totals for each of the last two years.

Goldman Sachs's profits declined 37 percent to $691 million, due to big losses on its foreign exchange trading, according to the report. Those losses were hedged by profits on interest rate contracts, but they weren't enough to make up for the substantial decrease in overall profits.

Citibank continues to lose money off its trading and derivatives contracts. The partially-taxpayer owned bank lost $211 million last quarter and $238 million in the second quarter, the report shows.

Bank of America made $467 million last quarter, a $650 million swing from its second-quarter loss. Wells Fargo, on the other hand, turned a loss, losing $78 million in the third quarter compared to its $306 million profit during the second quarter.

At Goldman Sachs, trading continues to make up a significant part of the banks' profits. Trading revenue accounts for 59% of Goldman Sachs' overall revenues, according to the report. The firm, which last year became a bank in order to accept TARP money, is the beneficiary of taxpayer-funded guarantees. Goldman Sachs owns a bank; its deposits are guaranteed by the Federal Deposit Insurance Corporation. The firm also has access to the Federal Reserve's cash, just like Main Street commercial banks. And it still has more than $22 billion in taxpayer-guaranteed debt, thanks to an FDIC program instituted last fall.

Financial and economic luminaries like former Federal Reserve Chairman Paul Volcker argue that banks with access to taxpayer cash shouldn't be allowed to also engage in trading activities like the kind the nation's biggest banks engage in every day. Though some movement is afoot in Congress to make this change, Volcker's arguments are largely falling on deaf ears in Washington.

Les Leopold: Have We Forgotten How To March?

2009-12-18T11:28:59Z

"I did not run for office to be helping out a bunch of fat cat bankers on Wall Street." President Obama, December 14, 2009.

Was the President signaling that it was time for progressives to form a visible protest movement against "fat cat bankers"? Did he all but invite us to march on the recent White House/bankers meeting?

Well, whether he invited us or not, where were we?

All the big boys showed up except for the chairmen of Goldman Sachs, Citigroup and Morgan Stanley who feared airport delays - they know their time is much more valuable than the President's.

What a perfect opportunity to show our displeasure with those who have so callously wrecked our economy, who have reaped the benefits of welfare for the rich, and who now are boasting record profits while unemployment reaches record highs.

In the Sixties this kind of protest was a snap. At the very least, you could count on a swarm of hippies arriving with plans to levitate the White House - something they actually tried to do to the Pentagon in 1968.

But we don't do that stuff anymore. Why is that?

Many who responded to my recent posts have come up with a number of answers. Here are a few:

The Internet distracts us, especially on-line porn and sports.

We're just too stupid, more like serfs who submit to their feudal masters.

The super-rich own our politicians, so why bother to lobby them.

We let off steam by blogging and then pretend that means something, (mea culpa.)

The Right controls the media and misinforms the masses.

We still have it too good, so please pass me another beer.

Bruce Levine provides a more chilling explanation. ("Are Americans Too Broken for the Truth to Set Us Free?") He believes we may be suffering from "abuse syndrome." He writes:

"U.S. citizens do not actively protest obvious injustices for the same reasons that people cannot leave their abusive spouses. They feel helpless to effect change. The more we don't act, the weaker we get. And ultimately to deal with the painful humiliation over inaction in the face of an oppressor, we move to shutdown and escape strategies such as depression, substance abuse, and other diversions, which further keep us from acting. This is the vicious cycle of all abuse syndromes."

I don't buy it. We've been abused many times before, yet, we've managed to recover the collective will to fight back. From 1930 to 1933, many Americans were worse than abused -- they were broken. During the Great Depression, millions of people were ashamed because they couldn't support their families. They felt humiliated to be standing on bread lines. They had little understanding of the economic system that was failing them, so they blamed themselves.

It's hard to imagine that the depressed and the downtrodden could rise up to change America. But they did. In a few short years the country was in motion, alive with sit-down strikes, union organizing, and protests of all kinds.

The point is not to glorify unions, or praise the profound New Deal changes they helped to usher in. Rather, we need to acknowledge that the "abused" quite suddenly became activated on a very large scale. Could it happen again?

We have two possibilities. The first is that the modern world has so changed us that passivity and apathy have become embedded within our very nature. Perhaps our will has been curbed, channeled and controlled by consumerism, visual stimuli and ideological education. This might make the activism of yesteryear totally irrelevant to our current predicament.

The other possibility is that human nature has not changed. Rather, certain kinds of organizations and organizers have faded from our political landscape- the kind who dedicated their lives to massive social change. History is not a cookbook. But the record clearly shows that massive social change doesn't happen by accident. I choose to be in this camp.

Throughout the Depression, even during its darkest times, dedicated organizers believed that the system as a whole needed dramatic change. They were very different than our current crop of community organizers who focus primarily on "winnable" issues, (Obama included when he was organizing in South Chicago). Modern community organizers feel uncomfortable with big picture issues that require solutions that seem beyond reach. They feel that striving towards such lofty goals will disempower their community participants who need concrete changes in the here and now. Better to fix the local potholes than howl about banker bonuses.

But Depression-era organizers enjoyed the howling. They had big ideas: They wanted to challenge the financial elites and put an end to the rule of bankers and plutocrats. They had a dream of a fairer world where unemployment no longer destroyed lives. They thought everyone who wanted to work should be able to find a decent job. If the private sector couldn't deliver, then it was the duty of government to create jobs. They were espousing big picture New Deal-like programs long before Roosevelt came to office.

For years before and during the Depression thousands of radical organizers (some who were Communists and many others who were not) worked towards big picture social change for a long, long time. At some point, for reasons we don't fully understand, something clicked. And once it did, it couldn't be stopped.

Hard times alone didn't create the upsurge in activism. We were four years into the Depression before large scale actions started to spread. The CIO, labor's new mass organizing vehicle, didn't form until Roosevelt's second term. So neither hard times, nor Roosevelt's election can explain entirely the renewal of mass activism.

If we look at any of our major movements, from abolition to populism to civil rights, we will find long periods when apathy and disheartening quietude were pervasive. Yet the hard-core organizers somehow endured.

The point is this: The debilitating apathy can turn into vibrant activism even when the odds are impossibly long. But that kind of change doesn't fall from the sky. It takes hard work, usually fueled by new generations of young people who believe that our nation can do better, much better. They provide the spark that raises expectations.

Institutions also are critically important, especially now. If just a handful of progressive unions organized demonstrations at banks and bankers' meetings, it might unleash the pent-up anger and frustration felt by tens of millions of Americans. Just three unions, the Service Employees International Union, the California Nurses Association and the United Steelworkers could easily put together large demonstrations just about anywhere, anytime. If they collectively committed to at least five large mobilizations against Wall Street in 2010, the abuse syndrome might begin to unravel. (See Bob Borosage's convincing call for demonstrations.)

Our mission is clear: We must find ways to tap into the human spirit which stands ready to transform unbridled personal greed into a massive quest for the common good.

Les Leopold is the author of The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It, Chelsea Green Publishing, June 2009.

Jim Cramer's Insanely Passionate Citigroup Recommendation Falls Flat (VIDEO)

2009-12-17T17:34:33Z

UPDATE: See Jim Cramer's response below

Though we think the following clip from CNBC's Jim Cramer speaks for itself, here's some explanation.

On Monday, Cramer went on a breathless -- and rather unbelievable -- rant about the merits of buying Citigroup's stock. (Yes, he was referring to everyone's favorite bailed-out, quasi-zombie financial firm.) His logic: Citigroup's stock was priced so low that it could sit in your portfolio for years, it has a great reputation abroad and was much less exposed to the mortgage market than, say, Wells Fargo.

Here's Cramer: "We're looking for doorbusters and you're getting a doorbuster! You're getting a discount and getting it big time and getting a huge piece of marked-down Citigroup merchandise."

So, what's happened since Monday?

Citigroup recently announced that it planned to repay the government's $20.5 billion in bailout funds by issuing stock in a secondary offering. At the same time, the government announced that it would sell off its stake in the bank.

But, last night, news surfaced that Citigroup's stock offering was going so incredibly poorly that the government, fearing it would take a loss, decided to delay its plans to sell its stake in the bank.

Jim Cramer's advice, however, was to "buy, buy, buy" Citigroup.

From the below video, it seems unclear whether or not Cramer is recommending the stock's secondary offering price ($3.15) or just telling viewers to go out out and buy the stock. Here's the accompanying piece from CNBC.com:

The share price is just $3.70, a near lottery-ticket price with somewhat similar potential. While the dollar amount doesn't matter, Cramer does bless this as a single-digit speculation play, the kind that investors seem to love so much.

"You have to take advantage of the discount, even if you don't like the company!" Cramer said on air.

How's that investment doing so far? Citi's stock stood at $3.20 early Thursday night -- just about a 14 percent loss in three days if you had bought Citi shares outside of the secondary offering price, as Zero Hedge pointed out.

Maybe Cramer's pick just needs some time to even out -- or maybe it will fare just as poorly as his housing bottom call from last spring.

WATCH:

(UPDATE: Jim Cramer wrote in and said that he intended his recommendation to only apply to Citigroup's secondary stock offering price, which was $3.15. CNBC.com's accompanying piece, however, and many of Cramer's other comments in the video suggest that Citi's main stock price of $3.70 was still quite low.

For example:

- Cramer says Citigroup's stock price will triple in the next few years.

- Cramer's fourth reason to buy the stock is that it was already at trading at low price -- before the secondary offering, in other words.

- At one point in the video, Cramer argues against buying the stock at any other price than at the secondary offering price, but then spends the next several minutes arguing why the stock is generally undervalued.)
Read more: Citi, Cnbc, $C, Banks, Jim Cramer, Citigroup, Business News

After TARP Exits, Obama Searching For New Ways To Boost Credit

2009-12-17T14:25:33Z
It will take more than a guilt trip to boost credit. With Citigroup (C) and Wells Fargo (WFC) joining JPMorgan Chase (JPM) and Bank of America (BAC) in repaying their rescue funds, the feds have lost a big lever for lending. Not that the Troubled Asset Relief Program proved effective in getting credit flowing again. Even when they had the federal funds, banks hunkered down in the face of losses. Loan originations totaled just $239 billion in September, down 14% from the average of $279 billion in the previous six months, according to a Treasury survey of the 22 biggest bailout recipients. Without TARP over their heads, bank CEOs are even less likely to lend.
Read more: Banks Lending, Citigroup, Wall Street, Credit Markets, Banks, Wells Fargo, Troubled Asset Relief Program, Bank of America, Main Street, Obama, Lending, Tarp, Business News

TARP Has Changed Little On Wall Street: John Gapper

2009-12-17T11:39:16Z
As banks rush out of Tarp to avoid second-guessing from Congress and restrictions on executive pay, little has changed on Wall Street. Bear Stearns and Lehman Brothers are gone but the banks that remain make money in the same old way.

As the FT reported on Wednesday, banks and hedge funds have made huge profits in distressed debt trading in the past year, aided by the Federal Reserve keeping short-term interest rates low. Meanwhile, the banks that turned out to be too big to be allowed to fail are bigger than ever.
Read more: Tarp, Treasury Department, Lehman Brothers, TARP Money, Tim Geithner, Wells Fargo, Citigroup, Business News

Eric C. Anderson: Rape of the American Taxpayer

2009-12-17T11:23:43Z
I used to have a bumper sticker on my truck that read, "If you are not outraged, you are not paying attention." This sentiment was specifically aimed at policies implemented during the Bush administration. After the November 2008 presidential election I tore the damn thing off...I'm now looking for a replacement. The Obama administration's unabashed participation in Citigroup's rape of the American taxpayer strongly suggests Washington has no intention of protecting Main Street from the institutionalized greed on Wall Street. We should be outraged...and demand the President start exercising his promise of "change"...right now.

My crushing disappointment with the White House can be directly linked to a Washington Post front-page story published on 16 December. In an article titled "Tax Deal is Worth Billions to Citigroup," the Post reports the Internal Revenue Service cut a special break for Citigroup and "a few other companies partially owned by the government" (that would be you and me, the average American taxpayer). It seems the IRS was directed to issue an exemption to existing tax rules that will allow Citigroup to avoid billions of dollars in normal federal liabilities. Here's the really disconcerting twist to this story--accounting experts believe the lost tax revenue may actually be greater the profit Washington would earn from selling our stake in Citigroup.

Under the existing tax code, Citigroup is allowed to reduce its taxable income in a profitable year by the amount of losses incurred during unprofitable years. The catch, this benefit can not be transferred to a new owner. Why? The IRS wanted to prevent money-making ventures from purchasing unprofitable companies as a tax shelter. The catch in this case, the tax code authors likely never envisioned a situation where the government was selling a controlling share of a corporation back to private stakeholders.

This development leads to a messy situation if you are Citigroup executives intent on escaping the compensation czar. Washington's sale of our 34% stake in Citigroup means the firm is now under "new" management and thus would not be allowed to write off an estimated $38 billion in losses incurred over the last two years. In other words, the standing tax code--before it was so kindly altered by the Obama administration--would have caused the boys and girls who ran Citigroup into the ground to actually suffer some of the consequences associated with their poor management. Under the revised code, the leadership team at Citigroup now will be rewarded for their buffoonery. Unbelievable.

But, wait, the story gets better. Obviously bruised by the Post's report, officials at the Treasury Department told National Public Radio "that taxpayers will benefit from this ruling because Citi's shares will be much more valuable." NPR goes on to declare, "Tax analyst sources agree with the Treasury. They say if this tax break wasn't allowed, Citi's shares would plummet because as you know, Wall Street is all about future earnings." Pardon my French, but this is utter bullshit.

Do you know what Citigroup shares are presently worth? $3.20. That's right, $3.20. And they are not going to get more valuable any time in the foreseeable future because Citigroup executives just issued another $17 billion in common stock and $3.56 billion in "tangible equity units" as a means of funding their hasty escape from the restrictions imposed under TARP. These same shares were worth $3.95 a day prior to Citigroup's flight from TARP. In other words, Wall Street investors were not impressed with the move--and don't see Citi becoming immensely profitable next week, in a month or a year from now.

You know what this means for us, the taxpayers who still own 7.7 billion Citigroup shares? Our potential profit associated with bailing out the Citigroup leadership is diminishing with every passing day. On 11 December 2009 we could have turned a profit of $6 billion by selling all these Citi shares. Now we might net $5.5 billion...by the end of January 2010 that will likely be down to $5 billion. By June 2010? Well, my abiding suspicion is that Citi might not last that long--but the executive team will have collected their bonuses and secured golden parachutes prior to fleeing their failure. The bottom line, we are being robbed, and the White House is abetting the theft.

Oh, I'm not the only one who thinks Citigroup and the White House are selling shareholders down the river. On 15 December 2009 Abu Dhabi's sovereign wealth fund filed an arbitration claim charging Citigroup executives with "fraudulent misrepresentations." In November 2007, the Abu Dhabi Investment Authority (ADIA) provided an ailing Citigroup $7.5 billion in exchange for equity units that pay an estimated 11% annual dividend. Under the deal these equity units were to be converted into common shares that ADIA would begin purchasing at $31.83 a piece in March 2010. ADIA clearly does not think Citigroup shares are going to be worth anything near that price in March...or anytime thereafter, and has now told a court Citigroup's leadership is guilty of lying about the firm's viability.

At this point I should mention ADIA is investing with Abu Dhabi taxpayer funds and thus is seeking to protect its citizenry's cash. (When ADIA originally sat down with Citi the firm's shares were worth approximately $34...this was not a risky investment...it only became a disaster because the Citi leadership had obviously taken absurd risks and Wall Street was no longer willing to support their malarkey--thus the current share price of $3.20.) ADIA is doing more to protect its constituents than Washington was willing to do for you and I. Citigroup's response to this filing: the leadership team will "vigorously" fight for their "legal rights." Right. With any luck the ADIA lawyers and a judge in New York will have more foresight and courage than the folks at Treasury and the IRS. Citigroup's executives have been misrepresenting the value of their firm for years and should now be held accountable for deluding anyone who invested in this house of cards.

President Obama, sir, I am paying attention and I am outraged--as should be every other taxpaying American. Rescind this tax break and leave Citigroup to the wolves. Washington needs to stop coddling the financial industry leadership. As we seem unwilling to prosecute the Wall Street executives who almost single-handedly caused the current recession, perhaps collapse of their empires will serve as a suitable punishment. I'm nominating Citigroup as the first object lesson.
Read more: Tarp, Obama Administration, Sovereign Wealth Funds, Taxpayers, Citigroup, Politics News

Raymond J. Learsy: Wall Street Tells the President of the United States to Bugger Off

2009-12-17T09:21:59Z
Acela Express Departs NYC Arrives DC
" 6 00 AM 8 52 AM
" 7 00 AM 9 44 AM
" 8 00 AM 10 49 AM
" 9 00 AM 11 25 AM
etc.

These were the Amtrak trains available to the three grandees of Wall Street; Lloyd Blankfein, CEO of Goldman Sachs; John Mack, Chairman of Morgan Stanley; and Richard Parsons, Chairman of Citigroup, leaders of perhaps the most important Wall Street firms. Yet not one of them was willing to change their flight schedules in spite of approaching weather, causing them to miss being in attendance with twelve other senior bank executives at at an urgent conclave summoned to the White House by the President of the United States. The meeting was called in order to discuss pressing issues; bank lending, executive compensation and legislation seeking reform of the financial services industry. According to White House sources they ascribed their absence from the meeting as due to "inclement weather."

The three must have felt sufficiently entitled that they could travel to Washington at the last minute and if the weather didn't oblige, so be it. With the nation up in arms about the perversity of pouring billions into the coffers of the banks (not only TARP, but counter party billions, federal guarantees of toxic holdings, green lighting conversion to becoming bank holding companies, access to myriad Fed programs etc., etc.) the symbolism of their tone deaf failure to be present at the President's meeting is beyond understanding. As one White House staff member was quoted, "It was pretty nervy."

And these grandees are the heads of organizations whose trading desks cash in on every nuance of change in the weather. They are ever alert to the gathering of a hurricane in every corner of the globe, knowing it may significantly impact the trading price of crude oil, and even more significantly paying for the services of professional weather prognosticators giving their grain trading desks early alerts on weather impacting growing conditions for wheat, soybean and corn crops so that their futures contracts can be traded with greater profitability. And with all this firepower at hand these three poobahs didn't have the interest nor considered it their obligation, given the billions of help their organizations received, to get a heads up on the weather front moving in. They stubbornly kept to their last minute flight schedules even with the approaching weather that would play havoc with their flight plans. Had their trading desks been equally oblivious and not had a fall back plan on major positions they had undertaken, it would have cost the career of the lead desk trader. Even then they had the option of a last minute reprieve, as an early train would have delivered them to Washington on time, but that would have meant traveling with the hoi polloi, the great unwashed, you know those little people whose tax dollars spared them the need from having to take the subway, ever. Hardly worth keeping an appointment with the President of the United States.

Their clumsy absence bespeaks of an arrogance that is frightening. Perhaps not the three individuals per se, but certainly the hubris of the Wall Street crowd. Here is a services industry vital to the well-being of the nation that appears to have its head in the sand, playing ostrich to the burning anger vested against them throughout the land. They are powerful, rich, with a Congress largely under their thumb. In turn we have a President who speaks for so many of his fellow citizens, and the leaders of the Wall Street crowd feel he can be figuratively and symbolically dismissed together with the anger of so many of their fellow citizens. It is a bonfire waiting to be lit. Beware!

Read more: Tarp, Lloyd Blankfein, White House, Citigroup, Congress, Amtrak, Washington, President Obama, Richard Parsons, John Mack, Goldman Sachs, Politics, Morgan Stanley, Wall Street, Bailout, Fed, Weather Forecasting, Business News

Home For The Holidays: Citi Suspends Foreclosures For 30 Days

2009-12-17T01:48:19Z
WASHINGTON — Citigroup Inc. will suspend foreclosures and evictions for 30 days in a temporary break for about 4,000 borrowers during the holiday season.

The New York-based bank said Thursday the suspension will run from Friday through Jan. 17. It applies only to borrowers whose loans are owned by Citi. Borrowers who make payments to Citi but whose loans are owned by other investors are out of luck.
Read more: Citi, Forclosures, Foreclosure Suspension, Foreclosure Halt, Citibank, Citi Foreclosure, Stop Foreclosure, Citigroup, Business News

Citigroup Stock Sale DELAYED By Treasury Department

2009-12-16T19:19:11Z
The Treasury Department is backing off its plans to help Citigroup free itself from partial government ownership after the markets priced Citi's shares below Treasury's cost.

Treasury was planning to sell up to $5 billion of its Citi shares at the same time the firm moved to repay some $20 billion in bailout funds. The key was issuing $17 billion of common stock. The troubled financial conglomerate felt confident that it could easily raise the funds from investors to start repaying taxpayers.

But Citigroup raised that money by selling 5.4 billion shares at $3.15 apiece, according to Bloomberg News. That's below the $3.25 price at which the government purchased its 34 percent stake.

The below-cost offer spooked Treasury, according to published reports, leading the government to back off its planned sale.

The bank told Bloomberg that Treasury won't sell any of its shares for at least 90 days. Treasury had been planning on selling all of its stake in the next 6-12 months after its initial $5 billion sale.

A leading bank analyst issued a report Tuesday questioning the bank's move to begin repaying TARP funds.

Citigroup was in a position to begin repaying taxpayers only because of the Federal Reserve's extraordinary policies adopted in the wake of the bailout, Christopher Whalen of IRA Advisory Service wrote in a report to clients. It was those policies -- not "any meaningful change or improvement in the financial condition" of the bank -- that made it possible for the bank to begin raising new funds through the capital markets. Whalen said the same applied to Bank of America and Wells Fargo.

Whalen also said the repayment would not improve Citi's situation, as it is still facing steep losses thanks to a basket of troubled loans and higher credit losses that won't fully hit the company's books until next year.

Citigroup has experienced $23.6 billion in credit losses through Sept. 30, nearly double the losses it had at this point last year, according to federal regulatory filings.

It also has about $60 billion in delinquent loans on its books, about a 58 percent increase from the same period last year, regulatory filings with the Federal Reserve show. The percentage of assets so delinquent they're no longer accruing interest is rising, suggesting that writeoffs are not far behind, further increasing the firm's losses.

UBS analysts told clients in a research note Monday that one of the "issues" with Citi's move was the fact that, "Citi's still losing money."

But perhaps most problematic for the firm is its dependence on foreign sources for funding. Foreign deposits make up 27 percent of total assets, or $510.4 billion, according to regulatory filings. Citigroup also has some $273 billion in foreign loans.

Without the protective layer of explicit government guarantees, like TARP, "important foreign constituencies may accelerate their migration away from" large U.S. banks, like Citi, Whalen wrote.

Already, two important backers have distanced themselves from the firm.

The Abu Dhabi Investment Authority, one of the world's largest sovereign wealth funds, is trying to get out of a commitment to invest $7.5 billion in the firm at an inflated share price, according to published reports this week. It filed an arbitration claim and is seeking more than $4 billion in damages.

That news comes on the heels of the Kuwait Investment Authority selling its stake in Citigroup. The fund turned a profit on its sale, but it's now no longer invested in the firm.

Whalen views that as a negative sign for the bank. "The Kuwaitis know what they're doing," he said in a recent interview.
Read more: Vikram Pandit, Treasury Department, Citigroup, TARP Repayments, Citigroup Secondary Offering, Troubled Asset Relief Program, Citibank, $C, Citi Stock, IRA Advisory, Tarp, Christopher Whalen, Financial Crisis, Business News

Dan Collins: Wall Street Makes Merry With Other People's Money

2009-12-16T16:11:42Z
There's a good deal of jolliness on Wall Street this holiday season, thanks to the billions of dollars in bonuses that will be stuffed into the stockings of your favorite bankers.

It's safe to assume that the final tally will be big, very big. After all, in 2008, a year of disaster for the financial sector, Wall Street still managed to dole out an estimated $18 billion in cash bonuses to New York's least needy. This turned out to be the sixth best bonus year in Wall Street history -- a much better performance than the rest of the seething country might have anticipated.

"Executive pay is like sugar. If you consume too much of it, you get a rush. And then you crave it. It becomes an addiction," said Vineeta Anand, Chief Research Analyst for the AFL-CIO Office of Investment.

This year, with a much healthier stock market, the rush is on. Bankers will likely be stampeding to the tree on Christmas morning. Johnson Associates, a respected New York compensation consulting firm, expects a 40 percent increase in "year-end incentives" at investment and commercial banks. (Johnson forecasts lower bonuses for other financial types, including the much-beloved hedge fund managers.)

And not everybody will be getting exactly what they want. Instead of piles of cash, Goldman Sachs is rewarding its top executives with millions and millions of dollars in stock. While the country hasn't exactly collapsed in awe and gratitude, this was certainly a more successful PR gambit than CEO Lloyd Blankfein's recent assertion that the firm was "doing God's work."

A recent lawsuit filed against the Wall Street Goliath by a pension fund maintains that the Almighty had nothing with the year-end stock bonanza. Instead, the suit credits a "trillion-dollar investment made by the American taxpayers that was meant to stabilize the financial industry" and not the "hard work of the executives."

Goldman speedily paid off the cash it borrowed from the government's Troubled Asset Relief Program. Real and threatened federal restrictions on executive pay have proved to be a stupendous incentive in getting the banks to pay back their government loans. Citigroup and Wells Fargo are the latest financial firms to raise cash to pay off the loans that place them under the jurisdiction of U.S. pay czar Ken Feinberg.

"We've gotten $90 billion back for the taxpayer in an accelerated fashion. I'd also like to think we've developed some guiding principles for compensation that will be followed voluntarily by Wall Street," Feinberg told HuffPost.

Whether Wall Street has learned a lesson is highly debatable. Even basket case AIG -- the insurance giant that remains under Feinberg's jurisdiction -- seems intent on maintaining the tradition of irrational exuberance when it comes to executive pay.

AIG's justification is always that it needs to make big payouts to keep critical talent. John Cassano, the head of AIG Financial Products, resigned after sending his firm down an $85 billion rat hole of red ink. But he was allowed to keep $34 million in bonuses, and put on a million-dollar-a-month retainer. The firm's then-CEO said AIG "wanted to retain the 20-year knowledge that Mr. Cassano had."

Cassano is finally gone but AIG is paying still more bonuses to members of his old unit, under the theory that they're the only ones who know how to unravel the complicated messes that their boss left behind.

And AIG has extended the theory far beyond people with very specialized knowledge who are going to be employed for a short period of time. Robert Benmosche, who came out of retirement to be the post-disaster CEO, strongly believes that a man's worth can be measured very precisely by the amount he is paid. And he threatened to resign if Feinberg didn't back down in his attempts to drastically cap salaries and bonuses.

Feinberg did backtrack -- reportedly following lobbying from government officials who worried about that fabled brain drain. The people who run big Wall Street firms are convinced that the top financial jobs can only be done by a tiny handful of very special people, who must be wooed and re-wooed every year with obscene amounts of money.

Failure to do so will mean they'll take their services elsewhere. This has always been an article of faith on Wall Street, but not everybody agrees.

"I think that in many cases Wall Street would be better off without these executives," said Nell Minow, co-founder of the Corporate Library, an independent research firm that specializes in executive pay and corporate governance.

"Corporate America has really lost the battle if the best argument it can make is that if executives are not paid what they want, they'll take their bat and ball and go home," Minow added.

She said the retention incentives in executive compensation pay packages should be much more closely linked to performance: "Too many of these retention incentives are what we call 'pay for pulse.' It's stick-around money."

Minow noted that some companies are now calling bonuses "discretionary pay" (like, maybe we won't notice) while others juggle cash or stock payments to conceal bonuses. Last year, for example, Wells Fargo got around a big cash bonus for CEO John Stumpf by boosting his base salary from $900,000 to $5.6 million.

No matter how you slice it, it's still a bonus. And once the gifts under this year's Christmas tree have been carted away, the firms who made it through the last year on the backs of the taxpayers are going to have to explain exactly what it is that their executives do to make them worth so much more than the rest of humanity.
Read more: Lloyd Blankfein, Tarp, Executive Pay, Wells Fargo, Afl-Cio, Aig, Pay Czar, Pay Czar Ken Feinberg, Goldman Sachs, Goldman Sachs Bonuses, Commercial Banks, Goldman Sachs Ceo Lloyd Blankfein, Ken Feinberg, Wall Street Bonuses, Executive Compensation, Citigroup, New York News

Nation's 4 Biggest Banks Cut Business Lending By $100 Billion Since April

2009-12-16T12:14:52Z
While the administration and Congress work to increase bank lending, the nation's four biggest banks have collectively cut their loans to businesses by more than $100 billion over the past six months, according to new federal data released on Tuesday.

Bank of America, JPMorgan Chase, Citigroup and Wells Fargo cut their commercial and industrial lending by a combined 15 percent from April to October, representing $100 billion, according to the most recent Treasury Department data. Loans to small businesses are down $7 billion, or four percent.

President Barack Obama announced his administration's small business lending initiative in March. As the unemployment rate hovers around 10 percent, there's been an increased push recently by the administration and members of Congress to stimulate lending to small businesses in hopes of increasing the availability of jobs. But loans to businesses by the top four banks are down $107 billion since April.

The reduced lending by the four biggest bank-holding companies, all of which are largely considered to be "too big to fail," appears to be steeper than in the overall banking sector. Over the same time period, commercial and industrial loans at all banks declined about 10.8 percent, or $166 billion, according to Federal Reserve data -- that figure includes Bank of America, Citibank, Wells Fargo and JPMorgan Chase.

Among the big four, Wells Fargo had the smallest decline at 5 percent; Citigroup had the largest at 29 percent. JPMorgan Chase cut its loans by $21 billion, or 13 percent.

Bank of America led the pack in terms of its cuts. The bank slashed commercial and industrial loans by 21 percent. Thanks to its enormous size, that translated into a $58 billion decrease -- by far the largest decline in business lending by any U.S. bank.

After Monday's meeting at the White House with Obama and the nation's top bankers, Bank of America pledged to increase lending to small- and medium-sized businesses next year by at least $5 billion.

There's no clear reason to explains big banks' decline in lending. Analysts have pointed to a number of different possibilities including decreased loan demand, a decrease in credit-worthy borrowers with sufficient collateral, cautious regulators protecting banks from potential losses and banks' need to shore up their balance sheets in anticipation of future, unrealized loan losses.

And big banks are able to generate large profits through their trading desks, enabling them to book profits without having to lend in an uncertain economic environment. After all, the banks' borrowing costs are at historic lows; for the biggest banks it's even lower. So why not roll the dice if one can borrow cheaply?

While Federal Reserve survey data and the banks themselves point to decreased demand for loans, small business advocates say the fact remains that banks are cutting back, making it even more difficult for credit-worthy businesses to secure financing.

"Lending isn't easing. It's just as difficult to get loans now as it was six months," said Molly Brogan, vice president of public affairs for the National Small Business Association, an advocacy group. "For months we've heard the administration talking about getting TARP funds to small businesses" in the form of increased bank lending. "But the proof is in the pudding. You're either going to do something about it or you can keep talking," Brogan said.
Read more: Small Business Loans, Tarp, Wall Street Bailout, Small Business, Wells Fargo, Bank of America, Small Business Lending, JPMorgan Chase, Bank Lending, Bailout, Citibank, Financial Crisis, Banks, Citigroup, Business News

Fannie, Freddie, Forgotten In Reform Bills, May Ask Government For MORE Money

2009-12-16T10:35:09Z
Those who assumed that the recent round of TARP repayments by Citigroup and Wells Fargo signaled an end to the bailout era may want to think again.

Forgotten in all of the recent outrage over soaring bank profits and Wall Street bonuses are two bloated, bailed-out institutions that are are increasingly exposing taxpayers to hundreds of billions in losses. Bloomberg reports that Fannie Mae and Freddie Mac, the government-sponsored companies that guarantee or own nearly half of all U.S. mortgage debt, are likely going back to the government for more money.

Fannie and Freddie are seeking an increase in their $400 billion government lifeline and claim that they can no longer afford to pay dividends to the government, Bloomberg notes. Cumulatively, the two companies have lost $188 billion in the last nine quarters, and have used approximately $112 billion in capital from the government this year. As they continue to hemorrhage money, the firms are balking at the annual dividend they are required to pay to the government, which amounted to about $5 billion each this year.

Fannie and Freddie's call for more money comes at time when much of the public discourse from policymakers has focused on bailed-out banks and financial reform. But the two companies, referred to as government-sponsored entities (GSEs), seem to be preparing themselves for the possibility of future losses. Here's the Wall Street Journal:

"The politics of any decision are thorny. If the Treasury doesn't increase the reserves now but needs to do so next year, it would have to appeal to a bailout-weary Congress in an election year. But upping its reserves now could remind taxpayers they still bear significant risk for the government's rescue of the financial system."

As the HuffPost's Ryan Grim has reported, Fannie Mae and Freddie Mac are not only huge, massively-subsidized firms, they also lack their own independent watchdog.

Which may be part of the reason why Fannie and Freddie seem to have been largely overlooked in the latest financial reform bills. At Time.com, Justin Fox wonders why:

The lynchpin part of the nation's financial system that is effectively owned by the government, the government has yet to ring in on. We've got proposed changes for credit rating agencies, over-the-counter derivatives, hedge funds, the insurance industry, executive compensation, institutions that are "too big to fail," even individual home loans--but not for the two government-sponsored entities that own or guarantee half of the nation's $11 trillion mortgage market.

To be fair, the Feds are working on it. And it's probably better to take more time and get this right--or as close to right as is possible--than to rush ahead willy-nilly. Still, it's a little annoying that there seems to be plenty of time for topics like creating jobs, which the federal government can't really do much about anyway, and yet not for figuring out how to deal with the $111 billion albatross hanging around taxpayers' necks.

In an interview with Time for its "Person of the Year" feature, Fed Chairman Ben Bernanke hinted at the sheer size of the exposure that the U.S. taxpayer has to the mortgage market through Fannie and Freddie. (John Carney has also written about this subject at length) Here's Bernanke, who seems to be suggesting the government's support for Fannie and Freddie will only deepen -- or, rather, he seems to be bragging about the GSE's accomplishments:

We've purchased about $1 trillion worth of mortgages that are guaranteed by Fannie Mae and Freddie Mac, and the U.S. Treasury. And in doing those purchases, we have succeeded in reducing the national 30-year fixed-rate mortgage rate from about 6-1/2% to about 4.8%. By lowering mortgage rates that way, we have helped to stabilize the housing sector, to help stabilize the housing crisis, and allow people to refinance, to buy homes. And that, obviously, should get construction started again and house prices stabilizing, and people being able to meet their mortgages. That's obviously going to be helpful.

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Read more: Tarp, Mortgages, Government Sponsored Entity, Freddie Mac, Fannie Freddie, John Carney, Mortgage Market, Wells Fargo, Fannie Mae, Federal Reserve, Gse, Ben Bernanke, Fannie Freddie Bailout, Citigroup, Business News

After TARP Repayments, Banks Are Now 'Free To Fail Again': Steven Pearlstein

2009-12-16T08:58:51Z
As far as I can tell, top administration officials are fixated on voter rage over bank bailouts and the resulting hit to the president's poll ratings. So they're looking for any way to show that the economy is improving and that the government will not only get its bailout money back, but earn a profit besides.
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By rushing to cash in their chips, however, the administration not only gave up political leverage and additional profit, but took the risk that one or more of the banks may find that it can't make it on its own.
Read more: Tarp, Goldman Sachs, TARP Repayments, Jpmorgan, Troubled Asset Relief Program, Financial Reform, Too Big to Fail, Banks, Steven Pearlstein, Obama, Washington Post, Citigroup, Business News

Robert Scheer: Wall Street's Fat Cats Are Still In Charge

2009-12-16T01:58:55Z
Most Americans now know that Wall Street bankers are so greedy as to never be trusted, and I suppose it is a sign of progress that our president now seems to grasp the obvious. How depressing, though, that a man who was elected as a consequence of one of the boldest grass-roots populist campaigns in this nation's history should now feel obligated to offer the disclaimer that "I did not run for office to be helping out a bunch of fat cat bankers on Wall Street."

But whatever his intentions, Barack Obama has in fact accomplished just that, to the immense anger of the public that elected him. Thus, it is understandable that, in his "60 Minutes" interview last Sunday, Obama lashed out at the ingrate bankers whose greed he had served but who have failed to seriously increase lending or forestall foreclosures and instead shamelessly pocketed the cash the government threw their way:

"They're still puzzled why is it that people are mad at the banks. Well, let's see," he said. "You guys are drawing down $10 [million], $20 million bonuses after America went through the worst economic year that it's gone through in--in decades, and you guys caused the problem. And we've got 10 percent unemployment."

But what did the president expect from those guys after he and his Republican predecessor were so quick to reward them so handsomely for their failures? In a reversal of the guiding principles of the meritocracy that informed Obama's own success story, the president promoted, rather than flunked, the people who got it all wrong.

One of those was Larry Summers, who as Bill Clinton's treasury secretary pushed through the radical deregulation that enabled disastrous Wall Street greed. But although Summers pocketed a cool $15 million from Wall Street in 2008 as he was advising Obama the candidate, he seems at last to have gained some awareness that the rules of the game he helped write now need to be changed. Speaking of the very bankers who once so handsomely paid him for his services, Summers, now Obama's top economic adviser, told CNN: "Here is what I think they don't get. ... It was their irresponsible risk-taking in many cases that brought the economy to collapse."

Summers is upset that the banking bandits he once so slavishly adored are now opposing even the tepid legislative reforms that the administration supports. The banking lobby is in full-frontal assault mode on efforts of Senate Democrats, led by Chris Dodd, to establish a single bank regulator who might actually bring the industry to heel.

The largest of the banks--the very ones that led the charge into the financial abyss--are fiercely lobbying against the very sensible and all-too-limited proposals that would increase their capital requirements and empower the government to prevent them from growing to unmanageable proportions once again. They are even more incensed about attempts to regulate the rewards that bankers reap from risking the capital of their depositors and the taxpayers who ultimately foot the bill.

However, Obama's stern rhetoric apparently did not move the top banking honchos who failed to show up for this week's White House meeting with the president. The heads of Goldman Sachs and Morgan Stanley waited until the morning of the Monday meeting to catch a plane and then claimed that fog prevented their journey.

Citigroup Chief Executive Vikram S. Pandit couldn't make the meeting with the president who had saved his corporation from bankruptcy because he was too busy lining up new private financing to allow Citigroup to escape the bonus confines and other limits stipulated by the government bailout program.

No bank bears greater responsibility for the economic debacle that has caused such worldwide suffering than Citigroup, whose immense growth was made possible by legislation that Summers and his then-mentor, Clinton Treasury Secretary Robert Rubin, successfully promoted in the late 1990s. Rubin was rewarded for his efforts with a top job at Citigroup, which was formed from one of the largest mergers in history and which paid him $120 million before its fortunes plummeted. The bank is by no means out of the swamp of its own creation, as it still holds a huge portfolio of toxic assets, is still sustained by substantial public assistance and was trading Tuesday at less than $4 a share--a tiny fraction of its value before Rubin led it astray.

It was Rubin, as an Obama adviser, who pushed for Pandit's selection as head of Citigroup. Perhaps Obama could enlist Rubin's aid in getting Pandit to accept the president's invitations to the White House. But of course there is no expectation of getting Rubin and Pandit to pay back the bankrupted homeowners they swindled.
Read more: Robert Scheer, Vikram Pandit, Robert Rubin, Larry Summers, Bailout, Wall Street Bonuses, Wall Street, Recession, Citigroup, Business News

Obama Was Nice To Bankers Despite 'Fat Cat' Remark, Says NY Post

2009-12-15T21:17:54Z
In public, President Obama is on a tear against Wall Street. In private, not so much

Over the weekend, Obama attacked fat-cat investment bankers, telling "60 Minutes" he didn't become president to aid and abet Wall Street -- which, only a year after the financial meltdown and taxpayer bailout, is now scheduled to hand out tens of billions of dollars in bonuses to its bankers and traders.

Read more: Foreclosures, Tarp, SBA Loans, Goldman Sachs, Making Home Affordable, Chase, Financial Reform, Jamie Dimon, Credit Crisis, Loan Modifications, Bailout, TARP Repayment, Blankfein, Financial Crisis, JP Morgan Chase, Citigroup, Business News

Bailout Banks Keep Tax Breaks As They Repay Loans

2009-12-15T20:27:04Z
WASHINGTON — Citigroup and other banks starting to repay the billions of dollars they borrowed from the government are getting another boost as they exit the bailout program: Billions more in tax breaks.

Tax law allows money-losing corporations like Citigroup Inc. and General Motors Co. to use current net operating losses to offset future taxable income, reducing their tax bills for up to 20 years after the losses occur.
Read more: Citi, Tarp, Geithner, White House, Irs, Bailout, Treasury, TARP Repayment, Banks, Tax Breaks, Citigroup, Financial Crisis, Business News

Rep. Edolphus Towns: Are Bank Executives Really Stuck in the Fog?

2009-12-15T18:18:17Z
President Obama held an important meeting yesterday with the top executives of the nation's largest banks. The president convened that meeting to urge these top bankers to increase lending which is an important part of our economic recovery. After being bailed out by American tax dollars last fall, the bankers, who still have their jobs because of the government's actions, should have made every effort to get to Washington. But the top executives from Goldman Sachs, JPMorgan Chase and Citigroup apparently got caught in the fog.

Like the executives from the aforementioned three banks, I was scheduled to fly from LaGuardia Airport to Washington, DC yesterday. Once I arrived at the airport, I learned that flights to National airport were grounded due to dense fog that blanketed the northeastern seaboard. Instead of giving up my travel plans, I drove to Penn Station, booked a ticket on Amtrak and arrived in Washington a few hours later than I initially planned. With a little effort and quick thinking, I made it to Washington with ease (despite the fog).

That got me thinking. After I read Andrew Ross Sorkin's DealBook column in today's New York Times on the president's meeting, I thought that if those executives really wanted to make it to Washington as they claimed, they could have taken the train just as I did.

It is inexcusable for these bankers to have missed the meeting. I am pretty sure President Obama would have postponed the meeting a few hours to accommodate the executives in appreciation of their last minute effort to rearrange their travel plans. Then again, common sense should have told these gentlemen that when the President of the United States summons you to the White House, you check the weather ahead of time and plan accordingly.

The behavior of these CEOs is just another example of the financial industry's careless attitude and actions toward the government, which bailed them out - and the American people, who paid for their individual bailouts. But the bankers continue to act as if they bear no responsibility for the economic collapse and have no obligation to change the way they do business. The banks must realize that the American people are angry and they see right through the bank executives' apologies for missing the president's important meeting.

President Obama was right to convene a meeting with the bank executives and remind them that just as the American people came to their rescue, they need to be part of the American people's economic recovery. A lack of available credit provided by banks has prevented small businesses - the engines that help drive our economic recovery - from creating jobs and putting money in the pockets of men and women across the country.

The next time President Obama calls on the bankers to meet him in Washington, I hope they will take the time to check the weather. It would be inexcusable for them to get caught in the fog.
Read more: Tarp, Banks, Wall Street, Bailout, Barack Obama, President Obama, Lending Crisis, JPMorgan Chase, Goldman Sachs, Citigroup, Politics News

NYT: A Ban Of 'Too Big To Fail' Banks Is Missing In Financial Reform Bills

2009-12-15T11:24:48Z
If we have learned anything over the last couple of years, it is that banks that are too big to fail pose too much of a risk to the economy. Any serious effort to reform the financial system must ensure that no such banks exist.
Read more: Pay Caps, Bailout Money, Financial Regulation, Too Big to Fail, Citigroup, Business News

Bailout Payback: Wells Fargo, Citigroup Repay $45 Billion In TARP Funds

2009-12-14T19:21:51Z
SAN FRANCISCO — Wells Fargo plans to sell $10.4 billion in new stock to help repay all $25 billion in bailout aid it received from the government at the height of the market meltdown last fall.

The announcement Monday from the San Francisco-based bank comes hours after Citigroup Inc. said it would repay $20 billion worth of taxpayer funds.
Read more: Tarp, Bailout, Bank Bailout, Wells Fargo, Citi, Citigroup, Banks, Payment, TARP Repayment, Repayment, Business News