January 2009

A DECADE AGO, CITIGROUP led a full-court lobbying press on Washington, ultimately winning what big bankers, insurance giants, and high-rolling investment wizards wanted: government deregulation. By forcing the regulatory cop off the Wall Street beat, these geniuses were then able to merge into huge financial conglomerates and amass fortunes on such inherently risky Ponzi schemes as subprime-mortgage derivatives (see Lowdown, November 2008).

Now, just a few years later, the house of cards they built has crashed down on our entire economy, and Citigroup went down as well. But this avaricious and arrogant conglomerate was quickly deemed “too big to fail,” by Bush and Congress, so Treasury chief Hank Paulson rushed to its side with plenty of taxpayer balm to revive it. The bungling bankers got $25 billion from the original Wall Street bailout fund, another $20 billion cash injection from the feds and a $249 billion government guarantee to cover losses on those bad investments it made.

No congressional hearing was held on this $300 billion giveaway to one bank — even though it was being handed twelve times more money than all three of America’s auto companies sought. Nor did Washington impose any requirement that Citigroup use our public largesse to make loans to American businesses–like, say, the hard-hit, capital-starved auto industry. On its own initiative, however, Citi has since made a major investment in the transportation industry. In November, the bank agreed to spend $10 billion to buy a toll road operator…in Spain.

By the way, where were those senators who’re now so loudly demanding that union autoworkers take wage cuts as a price of federal loans being given to their corporations? Apparently, lawmakers didn’t even ask how much Citigroup’s CEO is being paid this year. So, for the record, it’s $216 million. Or breaking it down to terms a wage-worker can relate to, $108,000 an hour. Why didn’t the senators whack his pay?

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