Archive for citibank

Citigroup Three Card Monty Policy on Executive Compensation

One would think that under the Obama administration of “greater transparency and accountability” that the 36% government owned Citigroup would wise up to the fact taxpayers are no longer tolerating huge compensations for, well absolutely nothing in return for shareholders but massive risk taking and losses.
Today, the NY Times reported that many of the bailed out banks who have received and continue to possess taxpayers’ money are looking for ways to divert previous “bonus” money to their base salaries.  No matter how they funnel money into the pockets of Wall St fat cats, they are simply raping their shareholders and taxing people who struggle to keep their jobs, their homes and pay their taxes.
Then why wouldn’t President Obama, Treasury Secretary Geithner, Senator Dodd and Congressperson Barney Frank do something about?
Even at the behest of taxpayers not to bailout failed businesses, the previous and current administration also failed to elect directors to the board of Citigroup!  How can that be?  36% shareholder and no representation on the Board of Directors.
Say what?
Doing a little research, you can easily detect the international political underpinnings to Citigroup.  Citigroup is made up of large concentration of foreign investors, mainly Middle East and Far East money.  A royal Saudi prince is the single largest shareholder as well as other various investment groups in the Middle East and Singapore.
So it is this writer’s opinion that because of the money ties to the Middle East, the current administration have no issue in bailing these people out with taxpayers’ money and at the same time, let them decide what to do with that money, even if it means it never makes it back to the taxpayers with interest.

One would think that under the Obama administration of “greater transparency and accountability” that the 36% government owned Citigroup’s Board and senior executives would wise up to the fact taxpayers are no longer tolerating huge compensations for, well absolutely nothing in return for shareholders but massive risk taking and losses.  Wrong!

Today the NY Times reported Citigroup as well as other banks that received and continue to possess taxpayers’ money are looking for ways to divert previous “bonus” money to their base salaries.  No matter how they funnel money into the pockets of Wall St fat cats, they are simply raping their shareholders and taxing people who struggle to keep their jobs, their homes and pay their taxes.

Then why wouldn’t President Obama, Treasury Secretary Geithner, Congressional leaders such as Dodd and Frank do something about it given the tough rhetoric during campaigning?

Even at the behest of taxpayers not to bailout failed businesses, the previous and current administration also failed to elect directors to the board of Citigroup!  How can that be?  36% shareholder and no representation on the Board of Directors of Citigroup?

Say what?

Doing a little research, you can easily detect the international political underpinnings to Citigroup.  Citigroup is made up of large concentration of foreign investors, mainly Middle East and Far East money.  A royal Saudi prince is the single largest shareholder as well as other various investment groups in the Middle East and Singapore.

So it is this writer’s opinion that because of the money ties to the Middle East, the current Obama administration has no qualms in bailing these foreign investors out of failed Citigroup with taxpayers’ money but simultaneously let Citigroup decide what to do with that money, even if it means taxpayers’ money never making it back to the taxpayers with interest.

How’s that for fiduciary responsibility post Madoff and Stanford?

Comments Trackbacks / Pingbacks (81)

Confused About How Government Is Working to Fix the Economy?

Well, don’t feel alone.  As United Technologies announced today that 11,600 jobs will be eliminated in 2009, these future unemployed will join the 12.5 million Americans who are currently unemployed as of the end of February 2009.  Year to date figures shows 1.3 million jobs eliminated which is an average of 22,135 jobs lost every day.

In the midst of the economic decline, it appears that there is much debate about the causes of the recession and the government remedies to arrest job loss, foreclosures and restore confidence in our financial sector which is widely believed to be the epic center of the crisis.

Jim Puzzanghera of the LA Times wrote on March 9, 2009:

Some experts say what these ventures have done is make an AIG or a Citigroup that’s “too interconnected to fail.” And it’s not just the size that would matter. AIG’s interconnectedness with other companies, markets and economies is so huge and convoluted that it’s almost impossible to foresee what all the consequences of collapse would be.

The prime example of this problem is about $500 billion in unregulated credit default swaps held by AIG. Those complex financial instruments are essentially insurance policies taken out on mortgage-backed securities and other assets. The swaps were designed to pay out money to buyers who got caught in exactly the type of financial crisis taking place right now.

In essence, AIG was committed to insuring hundreds of billions, if not trillions, of dollars in investments. When the housing market crashed and the economy nose-dived, those investments tanked as well. And AIG was liable for the losses — a liability so large that it is now overwhelming the rest of the company, including the still-profitable parts.

What’s worse, because credit default swaps were unregulated and the layers of transactions so arcane that they are difficult to understand clearly, the true cost is essentially impossible to measure with certainty. Once the dominoes began to fall, no one knew where the process would end.

“People don’t know the exposure, so as a result there’s a huge premium on fear and the unknown,” said Kent Smetters, associate professor of insurance and risk management at the University of Pennsylvania’s Wharton School.

However, Ralph Vartabedian of the LA Times wrote on March 10, 2009:

But critics contend that what was originally proposed as an overwhelming gesture of government resolve to get banks on their feet now seems like an intravenous drip, barely sustaining the giant institutions that account for the majority of U.S. bank assets. As time goes on, the problems appear again to be deepening.

“Some of these banks are walking dead and should be closed,” said Sen. Richard C. Shelby of Alabama, a 20-year veteran of the Senate Banking Committee and its senior Republican. “We are propping up financial institutions that are insolvent and have already failed. The government has made a political decision to keep them going at the taxpayers’ expense.”

At the other end of the political spectrum, the AFL-CIO Executive Council voted unanimously last week to urge President Obama to nationalize problem banks as a way to stimulate and stabilize the financial system.

“Every day we delay is another day workers in this country feel the pain of a stagnant economy,” said Richard L. Trumka, secretary-treasurer of the labor organization, a powerful influence on the Democratic-controlled White House and Congress.

Despite, P. Parameswaran wrote of US Federal Reserve Chairman as saying,

“In the near term, governments around the world must continue to take forceful and, when appropriate, coordinated actions to restore financial market functioning and the flow of credit,” he told the Council on Foreign Relations, a think tank, in Washington.

Speaking ahead of a weekend meeting of the Group of 20 finance ministers and central bank chiefs in London, Bernanke said while fighting the current crisis, policymakers should embrace reforms to the financial architecture that could help prevent a similar turmoil from developing in the future.

“We must have a strategy that regulates the financial system as a whole, in a holistic way, not just its individual components,” he said.

“In particular, strong and effective regulation and supervision of banking institutions, although necessary for reducing systemic risk, are not sufficient by themselves to achieve this aim.”

Martin Crutsinger, AP Economics Writer reported today:

Treasury Secretary Timothy Geithner says that within the next couple of weeks the administration will unveil its plan for dealing with the toxic assets that lie at the heart of the current financial crisis.

Geithner says that the plan the administration has put together will provide low-cost government financing to private investors who are willing to purchase the bad assets that are currently clogging banks’ balance sheets.

It is clear that our despite the expectation of the US Government to always have the answers or solutions to the problems of society, it is abundantly clear that they don’t.  As painful as it maybe to experience first hand the fumbling of government, it appears that finally that the government leaders who are charged with turning the economy around are beginning to focus in on the issues and causes which is good news.  The first step to solving any problem is first identifying the problems and causes.

The Dow Jones Industrial Average rallied 380 points today as Citibank reported positive operating profits the first two months of this year.  Perhaps, we’re beginning to see a glimmer of light in this dark and winding tunnel.

Comments