Letting Citigroup fail could be disastrous

[babylonsister]

Letting Citigroup fail could be disastrous
GOP senators envision Citigroup's failure but not catastrophe that could follow
Posted March 9, 2009 8:57 AM
The Swamp

by Frank James


If lawmakers liked what happened after Lehman Brothers collapsed, they'll really like what would happen if Citigroup failed.

Sen. Richard Shelby, an Alabama Republican, said over the weekend federal officials should let Citigroup fail seemingly unmindful of what happened after Lehman's demise.

Here's what happened in a nutshell. Last September after it became clear that Lehman was essentially insolvent and federal officials decided they couldn't save it, that set off a series of disasters that reverberate to this day.

Lehman's crash led to a money market with Lehman investments to "break the buck" meaning that for every dollar they put in, investors in that money market fund would actually get less than a dollar.

Because that's not supposed to happen, that shocked the financial and credit markets, leading to the commercial paper market where companies go for short term funding virtually drying up overnight. The economy is still trying to recover.

Citigroup is far larger and more complicated than Lehman so imagine the unintended consequences that would ensue from its failure.


more...

http://www.swamppolitics.com/news/politics/blog/2009/03/letting_citigroup_fail_could_b.html#more

[msongs]

1. gee when I fail I don't get a no strings attached taxpayer bailout....or even one WITH strings nt

[babylonsister]

2. I guess it's not just all about you. Or me. nt

[TwilightGardener]

3. As usual, Republicans shit the bed, walk away from the smell and the mess, and then

lob criticisms from a distance.

[Rosa Luxemburg]

4. but I've always wanted to own a bank!

[truebrit71]

5. Shelby is a fucking moron to begin with...

..so to hear him say stupid shit like this isnt't really that surprising...

[Tierra_y_Libertad]

6. They're trying to postpone the inevitable failure.

There is no way out of the catastrophe. The best the government can do is try to ease the pain.

The question is, will their efforts do more damage than good?

[acmavm]

7. Cripes let it die. Dead Scam Walking if they bail it out.

[rollingrock]

8. Disastrous for who?

the crooked loan sharks who run it?

certainly not for the taxpayers.
for them the demise of Citigroup would be a blessing.

[sinkingfeeling]

9. As long as it doesn't go under until they finish processing the $10K , very low interest loan

they're giving me.

[Blue_In_AK]

10. If it collapses,

does that mean I won't have to pay my mortgage to them anymore? I think I'd like that. :evilgrin:

[kentuck]

11. Maybe true?

Maybe not?

I know that is the official line about Lehman Brothers. But I'm not sure anything different would have happened if Lehman had been bailed out? I would think that Big Crooks like CitiGroup would like to be bailed out and would tell any story to achieve the bailout. I suppose there is a lot of misinformation and propaganda put out for personal reasons by banks such as CitiGroup. I'm not sure what would happen if they were permitted to go under or if the government took them over and broke them up into several smaller entities?

[GeorgeGist]

12. You see but don't realize how capitalism works.

When consumer's invest a dollar they're expected to get less than a dollar.

[rollingrock]

14. When worthless conglomerates receive multi-billion dollar bailouts

that's not capitalism it's socialism for the rich. Under a free market system, businesses that operate by means of fraud and corruption don't last very long, they eventually go out of business, or are shut down by the authorities. Instead of shutting these criminals down (and that's what they are), the government is propping them up. worse then socialism, this is outright theft because these corrupt financial enterprises are being bailed out against the will of the taxpayers. Government by and for the corporations.

[radfringe]

13. enough of defribulating with dollars....

if it's tooooo big to fail, it's tooooo big to exist