How Citigroup turned debt into gold

Posted by $ blarman 7 years, 9 months ago to Business
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Here's where the looting takes place: the only reason Citigroup was able to profit was because the government stepped in and assumed the risk AND fronted 1/2 trillion dollars in guarantees! Who wouldn't win in a situation like that!?!
SOURCE URL: http://www.bloomberg.com/news/articles/2016-06-07/how-citigroup-trader-mark-tsesarsky-turned-toxic-assets-into-gold


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  • Posted by $ Thoritsu 7 years, 9 months ago
    The ignorant villain in this story is the well-meaning, government interfering in the consequences of the decisions made by companies and people. Citigroup simply did what corporations can be expected to do, and maximized their position in this event.

    The government took our money and gave it to Citigroup. The gothic error in this is that taking our money through an inefficient government process to bail out the decisions made by corporations responsible (for decisions and consequences) somehow benefits the people the money came from with any kind of the value of the money.
    This whole process probably resulted in a <10% benefit to "the people", perhaps less, and did nothing but pay the government beast and incite it to even further intrusion.
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  • Posted by Herb7734 7 years, 9 months ago
    It is no wonder that almost every villain in movies recently is either a corporation or the head bastard of a corporation. While the great majority of people don't know the particulars of how they are being screwed over, between the Lefty writers and the unscrupulous business leaders, it is no wonder that young people are flocking to a nutcase socialist like Sanders.
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  • Posted by scojohnson 7 years, 9 months ago
    All of the surviving major banks were given significant deals from the Treasury and the FDIC... in general, the bigger banks were ordered to the shotgun marriage of buying out Bear Stearns (for example), no one wanted the pig and its risk, so the FDIC had to sweeten the pot by guaranteeing 70% of any losses after the new buyer (JP Morgan Chase) took the first 30% as a deductible of sorts.

    As the banks started to crumble, the incentives got sweeter, by the time B of A took on Countrywide's basket of goodies, the FDIC pretty much guaranteed 100% of their losses, missed payments, etc. in return for absorbing the risk.

    In hindsight, I don't think it was a great deal for any of them, they ended up hiring hundreds of thousands of people to work on the foreclosures, bailouts, loan mods, etc., and true the dollars on the mortgage were kicked in by FDIC, but the gov wasn't paying all those salaries and benefits for the millions of staff to deal with it. On top of that, the generally 'ok' shitty consumer bank reputations of B of A / Wells / Chase / etc got dragged through the mud as somehow being the agents of the apocalypse when they didn't write the loans or service them in the first place.

    I remember Fremont Bank products back in the day... "1 Day after Bankruptcy Discharge OK", "Minimum FICO 550 for 95% LTV", etc... lets be honest, it takes a concerted effort to get your FICO down to 500 or so, even a day after a bankruptcy, chasing that kind of stuff as a quality borrower of $300,000 and then forcing the other guy to clean up your mess is wrong in any capitalist's book.
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