In this morning’s Financial Times: [1]
The US government rode to the rescue of Citigroup [2], entering an agreement to guarantee up to $306bn in problematic assets and inject $20bn in capital to restore confidence in a bank that defines the term “too big to fail”.
[3]The 11th hour transaction, announced just before midnight on Sunday in the US, calls for Citi to absorb the first $29bn in losses it sustains from its portfolio of risky assets – from residential mortgages to commercial real estate and leveraged loans, collateralised debt obligations and auction rate securities. Federal government entities will stand behind 90 per cent of the remaining losses, which could amount to $249bn.
The timing of this thing is of interest, given that Citi has never been very popular [4]among so-called ‘progressives’, including Obama, Schumer [5], and the rest.
Let’s take a little trip into history, courtesy of the Chicago Sun-Times [6].
Obama represented Calvin Roberson in a 1994 lawsuit against Citibank, charging the bank systematically denied mortgages to African-American applicants and others from minority neighborhoods
This of course was pursued under Jimmy Carter’s CRA as modified by the Clintons. The result of that lawsuit, and others like it, have been repreatedly identified as the proximate cause of our current financial problems.
So now, as soon as Obama gets in, along with what is doubtless helpful tot he cause, a near super-majority of Democrats, Citigroup gets a huge bailout for the roubles that the Democrats caused in the first place, Obama among them?
Are those alarm bells ringing, yet?