Finance is Even More a Scam Than We Previously Admitted
by Johnny DebacleSeveral weeks ago, we came out and admitted that finance is a scam. It sounded like we were coming clean, but we admit, we held back a little that we didn’t share. In fact, finance is way more a scam than we admitted.
Citigroup (NYSE: C) (among other banks including BofA (NYSE: BAC) and JP Morgan (NYSE: JPM)) is creating a “super conduit”, essentially a $100 billion backstop for structured investment vehicles (SIV) to add a bid into a bidless market, a market which is 25% comprised of Citigroup SIVs. When the short term loans issued by SIVs to fund their purchase of riskier loan assets comes due, this super conduit will buy the short term paper if the existing holder decides not to roll their existing exposure. The solution to the SIV problem is….a bigger SIV…errr we mean a “conduit” to make sure things are “orderly-like, see”! Citigroup, with the coordination of the US Treasury, will be bailing itself out from having to put these assets onto their balance sheets….and charging a fee for the privilege!
We amend our previous admission to reflect the following: “Finance is really a scam where banks and large international financial firms, all of which are incrementally better and more prestigious than your firm, get together with the collusive glue of the central government, and indemnify themselves from ever having to bring a mistake onto their balance sheets, much less be held accountable for a mistake in any meaningful way.”
Related Reseach:- WSJ Follow Up to Finance is a Scam
- Finance is a Scam, We Admit It
- JD's Lending No-No's #4 and #5
- I'm Calling the Top, today. My ten signs:
Better still, the bank execs. can contribute massively to the Republican National Committee, and get some form of govt. guarantee for the new vehicle!
I don’t think bank execs only contribute to the RNC…Where do folks like Charlie Trie and Norman Hsu fit in this model?