Most are familiar with the Chinese Curse "May you live in interesting times". Some of the stories from the financial world over the last few years make me yearn for times that are only "interesting. When I read this story I become so angry I didn’t need my coffee.
To understand this story, it is useful to back to late 2008. At that time it is clear that Citibank was effectively bankrupt. To keep it from going bankrupt, it received $45 Billion in Tarp Money. It was clear from the outset that Citibank didn’t understood that people actually wanted to know where their money went. As outraged fueled by stories of the bank buying new jets for executives grew Citibank began to understand they had to at least to pretend to care what the public thought. So in February of this year they released a "detailed accounting" of where the $45 Billion went.
In its report on this accounting CNN included this vomit inducing quote from the Citibank Chairman:
Our responsibility is to put TARP capital to work quickly, prudently, and transparently to support U.S. consumers, businesses and our communities during these challenging times," Citigroup CEO Vikram Pandit said in a statement.
Accompanying this statement was the following accounting:
Citigroup (C, Fortune 500) said it had approved $36.5 billion in loans and other commitments backed by TARP during the fourth quarter of 2008, which included making $1 billion in student loans and $2.5 billion in business and personal loans. The bank also said it expanded credit lines and opened new accounts for credit cardholders...
Citigroup did not indicate how it spent the remaining $8.5 billion of the $45 billion in government funds.
Ah, where did the missing $8.5 Billion go? Let’s see, given the financial idiocy that has governed Citibank for years the best guess would be in the next asset bubble to burst. Hmmm, and the last asset bubble to burst just happened to be in Dubai. Could it be? You know the answer. From today’s New York Times:
That had to be what Citigroup, with its firsthand expertise with bailouts, must have been thinking when it lent $8 billion to Dubai last year. Oh, and here's an interesting fact: Citigroup made the loan to Dubai on Dec. 14, 2008. Take a look at the calendar -- that's after it received tens of billions in TARP funds. Citigroup's chairman, Win Bischoff, said at the time, "This is in line with our commitment to the U.A.E. market in general, and reflects our positive outlook on Dubai in particular."
Yep, Citibank took what Pandit called its "responsibility is to put TARP capital to work quickly, prudently, and transparently" and invested it in the next big asset bubble to burst.
It really is mind blowing. If I am going to get robbed, can’t it at least be from someone with a brain?
If there is a better example of why these big banks need to be broken I can’t think of one. The simple truth is that the people running these institutions are simply idiots. A monkey throwing darts at a dart board would have done better.
One definition of insanity is doing the same thing over and over and expecting a different result. Handing Citibank money and expecting anything other than losing it completely is insane.