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Citi: No Longer the Dumbest Bank — Now the Most Evil

Back in December there was a flurry of press around the passage of a banking bill that was 1) reportedly written by Citigroup and 2) put taxpayers on the hook for over-the-counter derivatives, obscure financial instruments that periodically blow up and in which Citi had a big position. Distrustful cynics like Massachusetts Senator Elizabeth Warren claimed to see a connection:

But most other people, especially those who remember how enthusiastically Citi blundered into the previous decade’s housing bubble just in time to be nearly-bankrupted by it, tended towards a more charitable explanation: Citi wasn’t smart enough to manipulate the legislative process, so whatever they were up to it was probably accidental.

But then Zero Hedge published this, which calls our preconceptions about Citi’s stupidity into question:

Is Citi the next AIG?

This fascinating piece of investigative journalism is too long and complex to excerpt here. You have to read the whole thing because every paragraph and every chart is a new bit of damning evidence. But for those who refuse to read it (though seriously, you should) I’ll summarize the high points:

In the third quarter, the part of Citi that is insured by taxpayers went on a derivatives writing binge, taking its total exposure to $70 trillion (with a “t”). Then it wrote a draft of new legislation that would delete part of an old law forbidding the government from bailing out banks’ derivatives positions. Then it lobbied successfully to get its language written into the latest banking bill. Then it revealed its new derivatives portfolio to the world.

In asking if Citi is the next AIG, Zero Hedge is referring to the previously-obscure insurance company that had somehow become one of the world’s biggest derivatives players just in time for that market to blow up in 2008. Had it not been bailed out with several trillion dollars of taxpayer cash it would have taken down Goldman, Citi, JP Morgan Chase and pretty much the entire rest of the global financial system. Zero Hedge then goes on to speculate that Citi might be covering up some kind of company-threatening position that will, in the near future, require the aforementioned taxpayer bailout.

If all this is true, then Citi deserves serious props for adaptability. They screw up, and instead of immediately melting down they hatch an imaginative plan to hijack what’s left of the federal government, implement it over the public objections of high-profile senators, and then kind of brag about it by announcing their new status as America’s biggest derivatives player.

Have to admit it, this is the behavior of a highly intelligent entity. Evil, yes, but smart.

54 thoughts on "Citi: No Longer the Dumbest Bank — Now the Most Evil"

  1. Citi is going through some very hard times these days and their profits plummeted to nearly nothing for the 4th quarter of 2014. This is a very sad situation. Let’s hope they can get back on track soon with revenues and profits. Citi is now working to shut down its unprofitable branches around the country and concentrate 90% of its banking operations into only 7 cities of actual financial significance, including here in Los Angeles this year where there are “quality deposits” unlike in the Podunks of America.

    What’s interesting: Citigroup
    customers outside of the biggest US cities better get used to banking
    online. The number of Citigroup US branches have dropped by 14% over the
    last year. The bank aims to close hundreds of locations around the
    country and concentrate 90% of branches in Boston, New York, Miami, Los
    Angeles, Washington, D.C., Chicago, and San Francisco, where it can
    attract what it calls “high-quality deposits.”

    http://qz.com/327365/citigroup-wants-90-of-its-us-branches-in-these-seven-cities/

  2. The largest private shareholder of Citigroup is Prince Alwaleed Bin Talas Bin Abdulaziz Alsaud of Saudi Arabia. Are the lower gas prices being manipulated to punish Russia with the cooperation of Saudi Arabia? Is the US laundering money to Saudi Arabia via Citigroup as a way to give money to Saudi Arabia for the drop in oil prices, with the taxpayers potentially picking up the bill if the whole derivative thing blows up?

    I don’t know, I’m just asking……all I know is something (ok, a lot of things) stink about this.

  3. Citi may be dumb, Citi might be evil, and like all of them it is corrupt to the core, but, I am sorry to inform you that they have nothing on Chase when it comes to pure malice.

    1. That is an absurdly false assertion, dude. JPMC is the VERY BEST BANK IN THE US and provides superb services paticiularly to those of us who are Private Client Banking customers.

  4. Evil, yes, but smart? No. I don’t believe it. Bribing whores doesn’t demonstrate that.

    Racking up $70 trillion in derivatives is foolish, even if you’ve managed to arrange for the US government to bail you out if things don’t go well. There probably isn’t enough money to do that and even if there is, on paper, that doesn’t mean they will actually be reimbursed if such a calamity happens. Chaos will make road kill of everyone if that ever happens, so what’s the point?

    The real issue is the nauseating level of corruption in Washington.

    1. Bribing whores is apt enough a description, or better, handing down orders to your slaves since congress was bought and paid for like in any respectable crony capitalist corrupt nation, but I do have a question; we all know that to end the corruption of our government we have to get money out of politics, in particular campaign donations which are nothing but legalized bribery. And there are ways to do that, cut off the need for that money, term limits of two terms for all elected offices. One man one vote on the same day for all 50 state’s primaries, and those no more than 90 days from the general election to keep the campaigns short and cheap. End the electoral college and end gerrymandering. Districts should be made out of whole counties whenever possible, though a few counties do have multiple congress seats, like LA County, then divide them not along partisan redlining but as evenly in half, or thirds or whatever as one can by population. Why are we not doing this? Why are we not insisting it be done? You want to live in a real democracy? Because the old USA is dead and gone, what we have now is NOT democracy. If we don’t fix it very soon it will not be fixable but gone forever.

      1. I have another “solution” or suggestion that you didn’t mention. How about reducing the scope of the Federal government? If the Federal government weren’t allowed to do so many things we wouldn’t be having to try to put out so many fires like decapitated chickens.

        Unfortunately, I believe the (first, and only?) US Republic is dead and it cannot be fixed. Either a revolution of some sort must occur to end it, or it will self-destruct on its own. Neither option seems good, because in both cases the power vacuum created could usher in something worse. However, the potential advantage of a revolution (and it doesn’t have to be physically violent one) is that – hopefully – that would imply that something better is intended to replace the old system. But that requires an educated and active citizenry (which is the same thing it takes to maintain a Republic, which is why we have lost this one.) I know that seems like a remote possibility but stranger things have happened.

        Ending the Fed and central banking in general may be a good place to start because in many ways it is the head of the snake.

        1. Those are absurd and ludicrous assertions indicating that you have no comprehension whatsoever as to the functions of Federal Reserve and banking in general.

          As to the federal government, your assertions are equally ludicrous and nonsensical and obviously nearly nobody would agree with you, so I would suggest you learn to deal with it just the way it is until and unless the MAJORITY OF AMERICANS desire to make any substantive changes in the size and scope of the US government.

        2. If Congress had remained in control of money creation in the US we would have a catastrophic out of control fiscal disaster in the US.

          The Federal Reserve has done an absolutely superb job of managing the money supply and monetary policy in the US over the past 101 years during which time the US has become the biggest economy in the world and the wealthiest country in the world with over $180 trillion in assets which are offset by only about $60 trillion in debt resulting in around $120 trillion in net aggregate assets in the US..

          Without the Federal Reserve and its monetary policy and influence over the past 100 years, wouldn’t the US still be the irrelevant backwater banana republic that it was back in 1913 as opposed to the economic superpower of the world – by far – with the world’s reserve currency used in 85% of all global transactions and the wealthiest nation in the world with over $180 trillion in assets?

          The Federal Reserve has an excellent web site which explains all of the operations, functions, and details about the Federal Reserve and the Federal Reserve Act and anyone wanting to learn more about the Federal Reserve can peruse all of that information including their fully audited and highly detailed independently audited annual financial reports as well as a wealth of other information and statistics at:

          http://www.FederalReserve.gov

          The U.S. Federal Reserve Bank – How it Works, and What it Does – Money, Dollars, & Currency

          http://www.youtube.com/watch?v=y1OJlJ9COg0

      2. The United States of America was NEVER A DEMOCRACY at all and has always been a REPUBLIC ever since it founding in 1976.

        Democracy is one of the worst and most unstable forms of government ever conceived and as Plato clearly detailed about 2,000 years ago is the lowest form of government ever conceived and is only one step above anarchy which is, of course, the bottom of the barrel in political constructs.

    2. You apparently don’t understand what derivatives are or how they work or how they are accounted for, dude. I’d suggest you learn about those matters.

    1. Mid level banker crooks will fall from tall buildings and have nail gun accidents.
      High level bankers crooks will depart the country via private jets.
      CNBC will report no one seen it coming.
      Dear Leader will report “some folks got Cyprused”.
      SoKalbeachdude will post, ” does anyone have any gold they want to sell?”

      1. What utterly ludicrous assertions. As to gold it has NO FINANCIAL RELEVANCE WHATSOEVER and is on its way to its mean of $456 and headed lower. And no bankers are going to be leaving Beverly Hills or the Hamptons or any place else in the US. Where on earth do you come up with such utterly inane nonsense?

        1. Central banks around the world are buying tons of gold right now. Why? because these central banks know that the fiat currency that they are producing is a scam which will eventually crash. World Central Bankers, Russia, China and India are buying all the gold as protection from the corrupt fiat currency. Communist like socalbeachdude doesn’t like gold because gold isn’t created out of thin air by a Central banker.

          1. Why put up such blatantly false and utterly bogus assertions?

            Central banks only have about 32,000 metric tonnes of gold worth less than $1.24 trillion and have reduced their holdings of gold by about 10% over the past 10 years from 35,000 metric tonnes of gold.

            The total value at current prices of all of the gold ever mined in the world is less than $7 trillion and about 70% of that is in the form of privately held jewelry widely dispersed among the 7+ billion people of the world. Even if all of the 180,000 or so metric tonnes of gold ever mined were collected into a heap and then dispersed equally among the 7+ billion people of the world that would result in each person receiving about $100 worth of gold which would be less than 1/10 of one ounce each.

            Gold not only doesn’t “put a lid on runaway speculation,” but rather DOES JUST THE OPPOSITE and is ONE OF THE MOST ABSURDLY SPECULATIVE COMMODITIES IN THE WORLD with a fundamental value of less than its mean of $456 per ounce to which it is headed and then lower.

            Obviously, NO CURRENCY WILL EVER BE “BACKED” EVER AGAIN WITH GOLD OR ANY OTHER THINGY. Hellloooo?

          2. False. Gold is just one of the world’s 27 major commodities and is no more special in any way than any of the other fungible commodities.
            In the US, the only relationship of gold to money is that the US Mint happens to mint some gold coins and you can use one of their 1 oz. American Eagle or other gold coins for their LEGAL TENDER STATED NOMINAL FACE VALUES which in the case of a 0 oz. gold American Eagle is $50.

          3. Hey SBD, you need to borrow all the fiat currency you can get and short gold….you’ll make a fortune!!!! I’ll be the one buying the gold you borrow taking the other side of your bet. thanks dude

          4. The best ways to short gold are through the ultra-short inverse ETFs, DZZ and GLD, and folks who did that in 2013 earned superb returns of 66% as the price of gold plummeting around 40% and those who take that strategy of shorting gold with DZZ and GLD may have even better returns this year. Thanks for that reminder, dude!

  5. Wherever BeelezeBOB Rubin shows up doing the devils work, you have evil. He’s still the most prominent behind the scene DEVIL in the OBAMA_CLINTON Admin

    1. Robert Riubin has not been associated with CitiGroup for more than 6 years since January 9, 2009 and is “currently engaged actively as a founder of The Hamilton Project, an economic policy think tank which produces research and proposals on how to create a growing economy that benefits more Americans.”

      http://en.wikipedia.org/wiki/Robert_Rubin

      1. I use a credit union that I like a lot, but I will never again trust any banking institution, and if you think credit unions are safer than money center banks you are too young to remember the S&L theft of trillions.

        1. Credit Unions should be safer they are not gambling with our money like the big criminal institutions. We will see negative rates this probably the end of this year. Desperation knows no limits.

          1. Credit unions are the RISKIEST and worst form of banking that you could ever use and are NOT FDIC INSURED. We certainly will not see “negative rates” at all on deposits The safest and by far the best banking is with the top 20 banks in the US and I wouldn’t consider having a penny of funds at any bank not in the top 20 in the US.

          2. ‘Why the utterly absurd and ridiculous antagonism against the fine professional banks in America?’

            Were you even born in 2008 ?

      1. OH no… SoKalbeachdude banks at one of the big criminal institutions. Well you were warned, sorry for your future loss.

        1. Only the top tier banks (top 20) can and do offer a full range of banking services and real professional competence, and I wouldn’t consider banking with any bank not in that tier.

          1. What’s the plan here, Chas, you gonna haunt this place with your bold comments until everyone is fed up and you move along to greener pastures where you can digitally harass every poor soul that has the audacity not to share your brilliant insights? I hope you’re at least getting a decent paycheck out of all this.

            By the way, bought any physical gold lately? Prices are good, you know, you really should consider it. Or are you still waiting for that famous mean of 456 $ an ounce of yours?

          2. At any price above its mean of $456 per ounce, gold is preposterously overpriced and massive losses are guaranteed. I have never purchased any bullion gold and have zero interest in raw gold but rather buy only JEWELRY and NUMISMATICS.

          3. socalbeachdude just loves corrupt fiat currency, he doesn’t understand that gold is real money that Central bankers can’t create out of thin air. Communist like socalbeachdude loves the Federal Reserve because it allows the Communist to better control the masses with debt.

          4. Gold has NO FINANCIAL RELEVANCE WHATSOEVER and is headed for its biggest plunges in history dead ahead as it reverts to its mean of $456 per ounce and then heads lower towards the current US government official gold price of $42.22 per ounce. Helllloooooo?

            Gold and silver has NEVER been “money” or “currency” at all. They have simply been used as two of the many materials along with brass, nickel, copper, silver, and other metals to mint coins where the MONETARY VALUE WAS THE NOMINAL FACE VALUE and not the material used to make the coins. Anyone, of course, to use a 1 oz gold legal tender American Eagle for its $50 face value at most retail establishments.

            The simple fact of the matter is that economies and currencies far outgrew gold as the world’s population has increased to its present approximate 7 billion people.

            The total value of the world’s entire gold ever mined of around 180,000 metric tonnes is only worth around $7 trillion when valued at $1,200 per ounce which equates to around $44 million per metric tonne.Gold lost more than $2 trillion in valuation in the past four years from April 2011 based on the drop from a manic high of $1,927 per ounce to less than $1,200 per ounce.

            The less than $7 trillion value of all gold in the world – 70% of which is in JEWELRY – is a mere pittance compared to the annual global GDP of more than $70+ trillion and global assets of around $800 trillion which makes gold just a tiny little niche collectible commodity of no relevance to valuation of other assets let alone for any monetary usage whatsoever.

          5. As the dollar continues to die gold will go up in price. The Comex will try to hold the gold price down but the price suppression scam will come to an end.

          6. Obviously, your assertions are not the case at all, and what is happening with currencies is that they are merely returning to appropriate equilibrium levels after having been severely distorted over the past 15 years by manic speculators in FOREX.

            The US dollar is right around 92 on the DXY and will be rising to over 100 and then likely towards and to around 120 on the DXY while the Euro returns to parity with the US dollar and then heads lower.

            As to your assertions regarding gold, they are as bogus as a $3 bill.

          7. If the dollar returns to equilibrium levels, then the dollar will be worthless as the paper it’s printed on.

          8. As to your absurdly false and totally stupid assertions regarding the US dollar, are you not aware that all commodities are valued in US dollars and that 83% of all transactions in the global economy are done in US dollars. Are you not aware that the value of the US dollar is soaring and is now at 92.60 on the DXY and headed much higher. Are you not aware that the value of the US dollar against most of the world’s 27 major commodities is up about 100% over the past 12 years since 2012 and that the Bloomberg Commodities Index priced in US dollars is now at a 12 year low?

          9. I’m aware that the corrupt Petro-dollar is propping up the dollar, and I’m aware that the Petro-dollar is backed by the U.S warmongering efforts. Great fiat currency we have, backed by warmongering, take over middle east countries and the death of innocent civilians.


          10. As to the so-called “petrodollar” THERE IS NO SUCH THING and oil only accounts for about 7% of all global transactions making it UTTERLY IRRELEVANT as respects the US dollar.

            You couldn’t possibly be MORE WRONG about the US dollar, obviously. The US dollar is right around 92 on the DXY and will be rising to over 100 and then likely towards and to around 120 on the DXY while the Euro returns to parity with the US dollar and then heads lower.

            As to the rest of your absurdly false and utterly bogus assertions, they don’t even merit any specific response, dude.

          11. Your utter ignorance obviously knows no bounds at all, based on the vast array of totally clueless and utterly bogus assertions you have put up here and elsewhere.

  6. Some differences come to mind: AIG, unlike Citigroup, was essentially an intelligence agency, because its data collected for insurance purposes had been shared with US intel since at least WWII. There are all sorts of intelligence connections over the decades, so AIG could be seen as a far-flung component of the military industrial complex, and thus more protected than your typical financial entity. Secondly, Citi isn’t as well-connected as Goldman Sachs or JPM even if they are sufficiently connected to get that bill through (few in Congress even understood its meaning, no doubt). Citi doesn’t share the Fed’s bank fault or administer much of the SNAP program like JPM does, and I can’t imagine anyone has a bigger revolving door with DC than Goldman Sachs does. I thought it was astonishing that they let Lehman fail back in 2008, but the bigger sharks managed it (by the skin of their teeth). So, legislation or no, if Citi thinks it’s going to blow up the world and still be left standing, it might turn out to be wrong about that.

    “Citi might be covering up some kind of company-threatening position…” is a fun one to ponder. There are so many possibilities: the dollar? oil? negative-rate bunds? the ruble? high-yield fracking debt? Greece? In such a fragile system one can speculate on this for hours. It’ll be interesting to see what it was.

    1. AIG was primarily a STATE REGULATED INSURANCE COMPANY and that those insurance operations were NEVER IN ANY WAY IMPERILED OR LESS THAN FULLY SOLVENT.

      AIG grew to be one of the largest P&C (Property & Casualty) insurance companies in the US and globally with its extensive international operations and was run with an iron fist and intelligent business practices by Hank Greenberg, its Chairman/CEO, who was OVERTHROWN IN A NASTY COUP BEFORE AIG RAN INTO MAJOR TROUBLES.

      What appears to have gone wrong at AIG is that it ventured into NON-INSURANCE BUSINESSES including aircraft leasing and UNREGULATED DERIVATIVES which are NOT INSURANCE PRODUCTS.

      What got AIG into financial trouble was the DERIVATIVES BUSINESS which made some very wild speculative bets that turned bad, and yes, Goldman Sachs (GS) was indeed a counter-party that was made essentially whole to the tune of around $12 billion by the US Treasury TAKEOVER OF AIG and I have no doubt that Hank Paulson was very much behind that move.

      There is still major ongoing litigation by Hang Greenberg, et al. against AIG and more and more facts are emerging in that litigation which will shine a greater light on what went on at AIG.

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