How much would it cost the American taxpayer to let Citibank fail?
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likearock, in Speakers Corner
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riddler 0
Fine with me. My mortgage is owned by Citi. I'll bet whoever buys the assets would let me renegotiate the final price 
When you buy up the assets of a bank that large, you want to cash in as much as possible right away to unleverage.
Trapped on the surface of a sphere. XKCD
I don't know what it would cost us either but, it's got to be a whole lot less than this 'bail-out' package. If, it was up to me, I'd let'em all go tits-up! The greedy sons of bitches were smart enough to get themselves into this mess... they should be smart enough to get themselves out of it... no bail-out. Meanwhile, they're rollin' in free money with no strings!
Chuck
Chuck
Jayruss 0
Quote
That would probably be fine.
As of last November, it had passed a 23:1 leverage on it's ON BOOK assets of 2.05T with another 2.9T not on the balance sheet.
For citibank to survive, we need to cover those liabilities.
For it to fail, we only have to cover the insured deposits which are relatively miniscule.
I've been trying to find out how much it would cost us - how many dollars would actually be covered by FDIC if say Citi were to fail. Anyone have an idea?
Remember a bank's liabilities are its deposits therefore, the 2T is what would need to be covered
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QuoteQuote
That would probably be fine.
As of last November, it had passed a 23:1 leverage on it's ON BOOK assets of 2.05T with another 2.9T not on the balance sheet.
For citibank to survive, we need to cover those liabilities.
For it to fail, we only have to cover the insured deposits which are relatively miniscule.
I've been trying to find out how much it would cost us - how many dollars would actually be covered by FDIC if say Citi were to fail. Anyone have an idea?
Remember a bank's liabilities are its deposits therefore, the 2T is what would need to be covered
Banks have diversified in the days since _It's a Wonderful Life_
Within the US, as of June last year the deposits in insured subsidiaries only totalled $260B with the bulk of $219B in Citibank, NA and only $89B of that actually insured.
They've used that to get themselves into all sorts of other trouble.
QuoteQuoteQuoteQuote
That would probably be fine.
As of last November, it had passed a 23:1 leverage on it's ON BOOK assets of 2.05T with another 2.9T not on the balance sheet.
For citibank to survive, we need to cover those liabilities.
For it to fail, we only have to cover the insured deposits which are relatively miniscule.
I've been trying to find out how much it would cost us - how many dollars would actually be covered by FDIC if say Citi were to fail. Anyone have an idea?
Remember a bank's liabilities are its deposits therefore, the 2T is what would need to be covered
Banks have diversified in the days since _It's a Wonderful Life_
Within the US, as of June last year the deposits in insured subsidiaries only totalled $260B with the bulk of $219B in Citibank, NA and only $89B of that actually insured.
They've used that to get themselves into all sorts of other trouble.
As I said, the 89B total was for the older $100,000 threshold. The total assuming a $250,000 threshold could be considerably higher.
But a bigger concern would be the overall effect on Citi's collapse on other financial institutions. In the wake of what happened with Bear and Lehman (both of whose size was miniscule compared to Citi), you could have several more major institutions topple as well. Then you have a full fledged panic on your hands. As bad as you think it is now, it could get much worse.
nerdgirl 0
Guys - thanks for the initial post & discussion.
What do see as best case scenarios?
And worst case scenarios?
Especially w/r/t the international repercussions in light of "and the vast majority of Citibank's $773 billion in deposits are uninsured, mostly because they're held outside the US" comment?
/Marg
Act as if everything you do matters, while laughing at yourself for thinking anything you do matters.
Tibetan Buddhist saying
What do see as best case scenarios?
And worst case scenarios?
Especially w/r/t the international repercussions in light of "and the vast majority of Citibank's $773 billion in deposits are uninsured, mostly because they're held outside the US" comment?
/Marg
Act as if everything you do matters, while laughing at yourself for thinking anything you do matters.
Tibetan Buddhist saying
Worst case: all the major US banks collapse. Since the banks are so interlinked over the years, once the majors fail, the smaller ones follow suit. Some people panic and withdraw their money in time, others count on the FDIC. People wait for months to get reimbursed by the FDIC. The FDIC has to get the Fed to print trillions because China damn sure won't lend us any more money. We end up shelling out much more than we would have in any bailout but it's too late to fix anything. The next ten years make Japan's "lost decade" look like a walk in the park.
Best case: somehow Obama and his team figure out a way out of this mess. It will cost us money though, there's no way around that. Cutting taxes alone is of limited value when half a million people a month are getting laid off.
Best case: somehow Obama and his team figure out a way out of this mess. It will cost us money though, there's no way around that. Cutting taxes alone is of limited value when half a million people a month are getting laid off.
I don't know if I'd call it miniscule. In this article, he puts the total deposits at 266B with 89B within the old $100,000 threshold. The extra coverage to $250,000 would put that number higher. Then again, the impact of another 300,000 unemployed would not help the economy either.
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