Sunday, August 21, 2011
I-N-S-O-L-V-E-N-T: Citigroup Was In Debt To The Fed 7 Out Of Every 10 Days From August 2007 Through April 2010
Bloomberg notes, in an article entitled "Wall Street Aristocracy Got $1.2T in Loans":
Citigroup was in debt to the Fed on seven out of every 10 days from August 2007 through April 2010, the most frequent U.S. borrower among the 100 biggest publicly traded firms by pre- crisis market valuation. On average, the bank had a daily balance at the Fed of almost $20 billion.
“Citibank basically was sustained by the Fed for a very long time,” said Richard Herring, a finance professor at the University of Pennsylvania in Philadelphia who has studied financial crises.
In other words, Citi was wholly insolvent, but the Fed decided to keep it moving, at least as a zombie.
The Bloomberg article includes a great quote:
“Why in hell does the Federal Reserve seem to be able to find the way to help these entities that are gigantic?” U.S. Representative Walter B. Jones, a Republican from North Carolina, said at a June 1 congressional hearing in Washington on Fed lending disclosure. “They get help when the average businessperson down in eastern North Carolina, and probably across America, they can’t even go to a bank they’ve been banking with for 15 or 20 years and get a loan.”
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Very useful article. Thanks.
ReplyDeleteSeems to me not only is the Obama administration's extend and pretend policy exactly that, it is not much improving the situation. Just the opposite. The amount of money on hand but not lent out is $1.5 trillion. Obama's contention that extend and pretend will improve the economy, restore investor confidence or save these banks from their insolvency is extremely tenuous.
All of this demonstrates both political parties are hand maidens of the too big to fail but virtually insolvent giants. America is an oligarchy of our big corporations. Let's not kid ourselves our political or economic leaders will fix our economy or anything else.
If we don't break the oligarchy, we are all screwed indefinitely. I've emailed my senators and congressman as well as Obama that if they don't create millions of private sector jobs ASAP, I won't vote for them in 2012. Suggest anyone who wants a real jobs program do the same.