Did you hear? Citigroup is paying back its $20 billion in TARP money! But as this New York Times editorial points out, big banks’ motives for paying back the government are (surprise, surprise) less than pure; namely, the banks want to get out from under the pay caps and restraints of the bailout. As the Times says:
“The Treasury Department, which seems to have no qualms about Citigroup’s self-proclaimed strength, plans to sell its $25 billion stake over the next six to 12 months… The Treasury Department’s approval is a grim reminder of the political power of the banks, even as the economy they did so much to damage continues to struggle.”
Adding fuel to the folly was yesterday’s no-show by Goldman Sachs, Morgan Stanley and Citigroup CEOs at President Obama’s summit on how the banking industry could help the ailing economy. Their excuse? Their flights were delayed due to foggy weather. (The weather actually wasn’t quite that foggy, according to this Gawker story , which also shows the schedule for trains that run very frequently to and from New York and Washington, D.C. ) The CEOs instead joined Obama’s conference by phone (talk about “phoning it in”).
More troubling to consider is whether or not new regulations — including the House bill passed last week — will be enough to fix the problems of financial institutions that are “too big to fail.” As the Times says, “If we have learned anything over the last couple of years, it is that banks that are too big to fail pose too much of a risk to the economy. Any serious effort to reform the financial system must ensure that no such banks exist.”
For in-depth commentary on regulatory changes, check out the January issue of Futures, in stores and online Dec. 28, and futuresmag.com for breaking news updates.
Tags: Citigroup, Goldman Sachs, Morgan Stanley, New York Times, regulation, TARP
