More good news today:
Citigroup Inc. Chief Executive Vikram Pandit abruptly stepped down following a clash with the company’s board over the bank’s strategy and performance, according to people with knowledge of the bank. …
The company’s shares fell 89% over Mr. Pandit’s tenure, in part because Citigroup issued billions of shares to repay government aid taken on during the financial crisis. Mr. Pandit received $165 million for selling his hedge fund to Citigroup in 2007 and received millions more in subsequent years, including $14.9 million in 2011.
Citigroup shares rose 30 cents to $36.96 in midday trading Tuesday.
This is very good news for Citi and the stock’s rise shows it. Mr. Pandit, whom this blog not so affectionately refers to as “Mr. Bandit” because he skinned Citi out of $165 million on the sale of his worthless Old Lane investment management company to Citi just before the Crash. Ever since then he has relied on government bailouts to keep Citi afloat, which earned him our coveted “Crony Capitalist of the Month” award at one point. He, like his fellow Cronies, couldn’t allow Citigroup to fail because of their very bad business decisions and bent knee to Bush to get a bailout with taxpayer money. They haven’t changed so much since then, more or less engaging in the same businesses as they did before the Crash. That is, other than to fight the government over the much needed higher capital ratios of Dodd-Frank.
Good riddance Mr. Bandit.
Even a cursory examination of the history of C shows what is wrong with the US economy.
In 1975, C was about to go belly up over loans to Zaire. The main Zaire cash cow were copper mines. Rebels seized those mines and Zaire couldn’t export copper to pay the interest and principal on the loans to C. C begged the US to intervene — but with Vietnam still fresh in everyone’s mind, the Ford Administration said go to hell. C persuaded the Belgians to intervene int their former colony to kick the rebels out. As a historical footnote, some say that it was the Belgian paratroopers that bought the AIDs virus from Zaire to Europe — but I digress.
In 1980, Chile, Brazil, et al couldn’t make their loan payments to C. C begged the US Treasury to intervene. The Carter Administration told C to go to hell. Fortunately for C, the free market Randian, Ronald Reagan came to power. He instructed the FDIC to not let little things as payments be the only factor in determining if a loan was current. C was able to pretend that tens of billions of bad loans were, in fact, current. C was able to drag this charade on for another 8 years until Bush Pere bailed them out.
Soon after (very soon after), C had a major problem with their mortgage servicing portfolio. The rumor was that the losses on the mortgage portfolio put C’s capital below the required level. John Reed made frequent flights to St. Louis (HQ of the mortgage servicing unit) to sort out the mess. Ex GS Chairman, Robert Rubin was not let a fellow club member fail. Again, C was able to escape. Rubin had a Saudi Prince put capital into C.
C approaching bankruptcy and getting bailed out by some government or prince is a certain as death and taxes
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