Friday, January 14, 2011

BANKING ROUND-UP: Tinny Timmy Can’t Figure Out Which Are The Important Banks! Oh My!—Citigroup, Ship of Fools—Bank Dividends for the Hoi Polloi

U.S. Treasury Secretary Timothy Geithner claims he cannot determine which American banks have “systemic importance” and which do not. According to the Financial Times:
A report by a US government watchdog into the rescue of Citigroup quotes Mr Geithner as saying: “What size and mix of business do you classify as systemic? … It depends too much on the state of the world at the time. You won’t be able to make a judgment about what’s systemic and what’s not until you know the nature of the shock.”
Darrell Issa, chairman of the House of Representatives supervisory committee, said Mr Geithner’s “candid acknowledgement that it is not possible to measure what’s ‘systemic’” was “concerning”.
You bet your ass it’s “conerning”—what exactly is Tinny Timmy trying to pull here? Because it’s impossible to think that Geithner is putting on the Wishy-Washy Show for no ulterior motive.

This reaction from the U.S. Treasury secretary came because of a recent report outlining the bailout of Citigroup back in 2008.

Citi was on the brink of collapse—depositors were yanking funds, counterparties were covering themselves, while its stock price fell from $22 to less than $1 in a matter of weeks—and yet the Citigroup  leadership was bitching and moaning about the government bailout!

According to Bloomberg:

The report yesterday by the inspector general of the Treasury Department’s Troubled Asset Relief Program, Neil Barofsky, lays out bank executives’ efforts to get a better deal during three days of negotiations in November 2008 that federal officials later dubbed “Citi Weekend.” Two months earlier, the bankruptcy of Wall Street firm Lehman Brothers Holdings Inc. had sent global markets into a tailspin.
“Citigroup executives were concerned that the government’s terms were very expensive in light of the amount of assistance provided,” according to the report. The New York-based bank didn’t agree to the terms until late Sunday night, when a deposit run was already beginning in Asia.

Now to all this, add the fact that—for the first time in three years—the big American banks are poised to start handing out dividends . . . after three years of Federal Reserve largesse, three years of of government assistance, and three years of obscene bonuses.

On Friday, JPMorgan Chase will announce its financial performance, while the other banksters—Citi, Goldman, Wells, BofA—will announce next week. 

The banks are expected to post profits of $70 billion for 2010 (you read right—Seventy Billion Dollars of profit that your tax dollars supplied). Guess finally, the banks are realizing they have to throw crumbs to the hoi polloi, to keep them docile.

It’s expected that they’ll begin announcements of dividends to shareholders soon thereafter . . . but hey, that might change, so don’t hold your breath.


  1. Gonzalo, I was very moved by your 7:00 pm post last night but did not have a chance to reply (it seems to have disappeared). What moved me was that you exposed yourself emotionally to us.

    What is happening in this country is very emotional and it was very touching to read your post last night. That you had been drinking last night meant nothing to me. I too have wanted to get drunk and finally post on Zero Hedge just to finally talk to someone who understands what we are going through as a country.

    I do not have an economics background but did take one economics class in college (macro economics). When the bailouts happened in 2008, I was as shocked as I was on 9-11. On 9-11, I realized that we were not safe from enemies outside this country. In the fall of 2008, I realized that we were not even safe within this country. My eyes were opened wide that fall and I have read all I can since then. Reading the tea leaves is difficult but your articles, Gonzalo, stick out above almost all others for me.

    I have only one friend who understands what is going on. I tried to explain it to my wife but when I eplained hyperinflation to her, she only went out and stocked up on $1000 hand bags and had our bathrooms remodelled. I have confessed my fears to my priest (sin against hope-despair) and since he is German and grew up during the Weimar years, he just tells me horror stories of the hyperinflation that Germany experienced when he was a child.

    Even though you erased last night's 7:00 pm post, I want to thank you for it because the emotion you revealed was something I have been feeling for 2 years. Thank you, Gonzalo.

    I also want to thank you for creating this blog and I hope that some of the sensitivity you've shown continues because I think it is something that is missing in other blogs (zero hedge is/was my daily read). I look forward to reading your thoughts each day now.

    Keep your chin up, work hard, plant a garden in the spring and hopefully we will all find ourselves and our children stronger after we get through the hard times to come.

  2. I'm also glad I got to see the 7 pm post last night. It was genius.

  3. I want to read the 7 pm post pleaseeeeeeeeee
    I wanna seeee it


Knock yourself out!

The cult of stability is a culture of death.