Citigroup's Latest Rescue Plan May Still Not Be Enough

[Purveyor]

Source: New York Times

By any measure, the federal government’s latest rescue for Citigroup is perhaps the most daring attempt yet to stabilize the nation’s beleaguered banks. But it almost certainly won’t be the last.

No sooner did the Treasury Department announce on Friday that it would increase its ownership in Citigroup than the questions began to swirl.

The big question, of course, is this: Will this plan, the third since October, be the one that finally works? Will it shore up this $2 trillion behemoth? Or is the outcome that the banks and the government are so desperately trying to avoid — nationalization, under whatever guise — only a matter of time? Wall Street’s judgment was swift and brutal.

Citigroup’s share price, which a little over two years ago was flying high at $55, plunged 96 cents to a mere $1.50.

Other banking shares also fell hard, underscoring the acute anxiety over where this will end and what the government will do next.

Read more: http://www.cnbc.com/id/29441991

[LiberalFighter]

1. Break up the damn CitiGroup

[radfringe]

5. If they are too big to fail - they are too big to exist. n/t

[JCMach1]

7. Been saying that for months...

Totally agree

[mwooldri]

11. I thought that was the plan actually...

CitiGroup is splitting into CitiCorp and Citi Holdings.

Maybe need further breakup?

Mark.

[LiberalFighter]

12. Absolutely more breakups.

[acmavm]

2. If the disease if fatal, take it off life support. Let it die.

[Alcibiades]

3. Let everyone off the hook

Citi has its hooks into millions of Americans. Let them go under.

[BR_Parkway]

4. What if their stock dropped to zero? Do they cease being a company?

[ozone_man]

6. We keep bailing them out before it gets to zero.

It should be bankrupt ten times over by now. Instead we've created these zombie banks that keep sucking the life blood out of the taxpayers. And the same top management team that made all of these irresponsible loans is still there.

[radfringe]

13. problem is there's a hole in their bucket

and keeps leaking money.

[The Stranger]

8. The Gramm Leach Bliley Act of 1999 repealed parts of the Glass Steagall Act of 1933.

It was part of the Neoconservative dream to "de-regulate" and privatize every aspect of American life and, in the words of Grover Norquist, drown the government in the bathtub (I'm paraphrasing).

http://wonkroom.thinkprogress.org/2008/09/20/economists-blame-gramm/

It was part of dismantling of the U.S. socio-political infrastructure built upon hard won lessons dating back to the Great Depression. Privatizing social security, obliterating the social net, and allowing corporations to run free to raid the public treasury was the goal.

They eviscerated the very banking regulations that arose out of the Great Depression, that prevented banks from speculating in financial markets, and, not ironically, brought about another Great Depression.

But the media that has become a cancer upon the U.S. will not tell you this. Instead, the GOP Hate Cult churns out 24/7 a smorgasbord of propaganda covering for this catastrophe. The pundits feign ignorance, but they really know what happened, and are probably just as shocked as you are.

Only they won't mention Gramm Leach Bliley -- not a single peep of it.

[w4rma]

9. Let. It. Die. No amount will be enough. Their books have been cooked. (nt)

[Fire1]

10. Apparently, Citi doesn't pass the stress test, so let them fold.

Converting investor shares into 'common stock' only dilutes their investment and I'm sure Abu Dhabi is lovin' this! but it's better than nothing.