December 14, 2009
Shelia Bair, chairman of the Federal Depositors Insurance Corporation, spoke with CNBC this morning from the White House lawn (see first video below). She was asked several questions concerning the state of American banks etc, but she skirted two questions concerning Citigroup. The second question was the one that caught my ear. Her response was understandable because she nor anyone in the present or past administration want that sort of info to be front and center in the news world.
My “friend”, Erin Burnett of CNBC, in response to what her teleprompter was telling her to ask Bair, said “I guess I’m sort of the bad cop today” — something she doesn’t like being toward Wall Street. Anyway, after “qualifying” the impending question, she asked Bair how much Citigroup debt does the FDIC guarantee. Following a bit of stuttering, Bair, said “I really don’t like commenting on open operating institutions”. Then she covered her royal rear end by saying that kind of information was available on the FDIC web site. However, you will be challenged finding that info; but there were some “references” found.
Under “Assistance to Citigroup” you will find: “The asset pool amount that is included in the loss-share agreement is $300.8 billion”. In another report, “Some FDIC-facilitated resolution and asset disposition agreements include loss-share provisions that involve pools of assets worth billions of dollars and extend up to 10 years. Citigroup, for example, involves $306 billion in loans and securities protected by loss-share provisions”.
Later in the day, in another report, Erin Burnett referred to the “$300 billion guarantee” to Citigroup. However, in the same one, Steve Liesman said Citigroup and “other major banks” have $300 billion in loans guaranteed by the FDIC (see second video).
These guarantees by the FDIC, using taxpayer money, seems to be a subject that everyone wants running under the radar. The only money regularly talked about is the TARP money, and how Citigroup is “paying-it-back”! Naturally, we all know the reason Citigroup and others want to pay back that money is so the government has no say-so over how much the bankers earn — and I use the word “earn” very loosely.
There’s no public knowledge of how much money the Federal Reserve has handed over to Citigroup, or any other bank for that matter. But we all know it’s a substantial amount. So the question that bares asking is, could Citigroup come up with the billions to pay back the TARP money without the backing of the FDIC? My bet is they couldn’t. So what’s the final outcome? It’s simple, really — first, the taxpayers are not only still on the hook for billions to Citigroup, but billions more than the TARP amount, and, second, Citigroup will now be able to dole out as many billions as they want in bonuses without any worry from the government.
Isn’t the taxpayer bottomless money-well a wonderful thing to have access to?
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