While watching the news a night or two ago, I was taken aback by the calm reporting of the fact that CITI bank, had went out and bailed itself out. Didn’t go before Congress and ask for help like the airlines people did when they got in trouble after 911, or like Conrail did years ago. And in the same breath the news caster made mention of the fact the deal had already gotten federal approval!
How in the world could they have gotten that so fast? Turns out, the federal approval they had gotten was from the Federal Reserve. The Federal Reserve is not exactly the government. “It is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government,” The Federal Reserve is subject to oversight by Congress, but Congress is so up to its ears in matters of state, I doubt they even gave the bailout notice.
So with approval of fellow bankers, CITI Bank put one it’s main men on a plane and sent him off to Abu Dhabi. There he secured the support and financial backing of the richest fund in the world and bingo, problems of meeting payments were all solved. Now this was not a chump change deal. 7.5 billion dollars came from somewhere to somewhere else and bingo everything was taken care of.
Before you get all jittery as I did about foreign investments taking over another American company. Relax; we have been assured that the lenders of the money will get no place on the Banks Board. And the since the bank is paying them back at 11% interest they figure things will all work out in the long run.
Now you might be wondering how you can earn, 11% interest on your money. Well don’t hold your breath. Not even people with hundreds of thousand of dollars get 11% interest. This was as they say a sweetheart deal that kept the bank a-float and our pension and savings funs solvent. We should be grateful?
After all this mess was started by folks like you and anyway ( yeah right), trying to make a buck in the real-estate market. And with the foreclosure frenzy spreading from town to town like a California Wildfire out of control, Banks are hurting. The gave out loans to people who either did not have the wherewithal to pay them back or just didn’t understand what would happen when the Adjustable Rate Mortgage did some adjusting. Of course the banks made money on the loans, a lot of money, but the sheer magnitude of loans going south is too much for them to handle.
A strange irony though to all this, is that the oil folks get their funds from people who just keep on driving and guzzling up their product. Asking for 11% interest from the Bank, really isn’t asking for too much. It’s is in a strange way; just a roundabout way of topping off their tanks with our money for a second time!