The Blog Of The Securities Industry Professional Association

The Emperor’s Shiny New Coat

The cost of corruption by our Government and the prospects for the future.

On September 29th 2008 Citibank announced they were buying Wachovia Bank for a whopping $1.00 and that the Federal Government (FDIC) would provide them with up to 300 BILLION in bad debt protection. (cnn article here)

The announcement caught this writer by surprise because as many of you may know, I have predicted for over a year that Citbank was under water as were most of the top elite firms on Wall Street. Within days Wells Fargo announced they would pay $10.00 per share and would not require ANY Government assistance. What should have been happy news for the Tax payers of America quickly turned into what I believe was the greatest act of corruption by our Government since the Watergate cover-up. The FDIC announced that “they stand by their original deal with Citibank”. I was very perplexed by this and wrote several articles about why our Government would want to be against a takeover bid by Wells Fargo that Gave Shareholders a 900% increase in take over price and would save taxpayers 300 billion? (SIPA coverage here)

Citbank was bailed out last week by the Government less then 60 days after they supposedly had enough money to by Wachovia and the FDIC announced they would secure “ up to 300 Billion in bad debt for Citi”. The point of this article is not to gloat about predictions, but rather to ask why NO ONE cares that our Government just tried to pull the wool over the taxpayer’s eyes? Its almost like the fable of the Emperor and his “ expensive coat made of invisible gold”. You may recall that all the citizens lined up to praise this amazing coat until a young boy went up and asked the king “ why are you Naked”???

Right now are markets are in turmoil, our economy is on life support and instead of getting strait answers our government is taking part in elaborate cover-ups to bail out additional firms. There are several questions that we as American citizens should be demanding answers to:

  1. The Bailout plan was pitched to Americans as a 700 billion plan…yet Citibank alone required nearly HALF that amount….why didn’t the government disclose this or the fact that the bailout plan was certainly over a TRILLION dollars?

  2. The same day they announced this farce of a take over, Citibank also announced they ‘raised 10 billion” in a capital raise to do this deal….THAT IS FRAUD!. That 10 billion went to the bad debt they were carrying not toward a Wachovia deal.

  3. What did the FDIC, Paulson and Bernanke know and when did they know it? And why hasn’t Congress called these clowns to the chambers and ask them these very basic questions?

 This is one of the greatest scams ever attempted yet the rewards are still the same. The tax payers money bailed out a corrupt, poorly run and unprofitable company. The next time you hear members of the SEC, FINRA, the Treasury or the Fed talk about the need for better regulation, just remember the source. They are all in concert helping to create a corrupt banking and brokerage system that quite frankly, most Americans have little or no confidence in. In addition, the next time you do a capital raise for your brokerage firm, think about what would happen to you and your firm if you were to raise money on the pretence of buying another firm but then you actually revealed you were bankrupt a few weeks later. Quite bluntly: YOU WOULD HAVE SEC CHARGES AGAINST YOU AND WOULD BE FACING JAIL TIME!

Maybe Im not alone in my disgust for our Government our regulators and our markets…Maybe, just maybe this explains why despite all the money, programs and bailout money, the markets continue their slide…Perhaps I’m not the only one who sees the naked king strolling down Wall Street with a big grin on his face because he thinks we don’t know better? Maybe, just maybe Americans might actually be realizing that this ‘BAILOUT” money should really be for ‘BAIL” money because these actions are criminal for lack of a better word? The next time you forget to disclose something in your WSP’s or in Offering material, Tell your regulator that you want the FDIC/CITI treatment and instead of criminal charges you should be receiving tax payer assistance!.

Long Live the KING!!!



Post Metadata

December 4th, 2008


Comments are closed.