"Citigroup, under pressure to rapidly downsize, is preparing to unveil a major reorganization that will mark a further step toward dismantling the financial conglomerate..."
I wonder where this pressure is coming from!? Just kidding. I have an idea from where and by whom. In case anyone was wondering, this is what happens when the "banking experts" elected to Congress begin running financial institutions. To say that I am a bit concerned about where this all may lead is an understatement.
Here is an example of the factors driving my concern: the recent decision on the cramdown option proposed by enlightened Senators and now "endorsed" by Citi. This option would allow bankruptcy judges to set the principal value of homes in bankruptcy court. I find it hard to believe that this is the best idea available for stemming nationwide declines in home values.
In any case, the cramdown option was first proposed last year by Senator Dick Durbin of Illinois. It was rightfully met with resistance by lenders and other housing groups at the time. This year it is now seen as the best path forward. Citi changed its tune and is on board, perhaps because of the small payment of $25B awarded the institution as a result of the bailout.
Anyone who has read Ayn Rand's "Atlas Shrugged" likely sees the interesting parallels between the fictional Washington of the novel and the Washington of today.
I am no conspiracy theorist, and generally believe most people in government try to do their best, but often policy-makers are ill-informed (this includes policy-makers of all kinds, including a number of financial institution boards). Ill-informed decision-makers make ill-informed decisions. I believe that the folks at Citi know this isn't the right path, but given their newly minted allegiance with Washington they have no choice but to follow it to its end.
While credit unions have been largely locked out of the bailout game, perhaps this is the best thing going for the industry. We owe favors to no one but the members who own us.
