What would you do if your neighbor came to your front door and told you that he/she would be going to Las Vegas and gambling money from everyone in the neighborhood ? Now what if he/she told you that if he/she won,they would get to keep every cent ? NOW suppose that they told you that you and the neighbors would be compelled to make good any losses at the slots,crap tables ,etc...

What would you do ?

Well, that's what just happened this morning when our government bailed out Citi.(Don't forget that one of the largest shareholders in Citi is a Saudi prince and one of the richest men in the world)

Capitalism without bankruptcy is like christianity without hell...

I wonder why the government just doesn't let these businesses collapse. If they made bad investments, they should have to pay the price for them. If that price is a bankruptcy from which they never successfully recover, then so be it.

Part of the risk of capitalism is total bankruptcy, or so I thought.

Granted, if the government made it known several months ago that they refused to bail out anyone, and if all they did was increase safety net services - emergency shelters, emergency food boxes, etc - A lot of people would suffer, but would we come out better for the experience in the end?

I think so.

If a company is "too big to fail" Shouldn't that mean that the company needs to be broken up?

Or at the least forced to maintain some sort of insurance and/or rainy day fund?

I think that the Government should bail ME out. Screw the $600 stimulus checks. I have bills. It wouldn't even be that much for them, just a hundred grand or so would do me just fine. Hell, they should make Michael Vick bail people out with his "pocket money".

@MA35TRO: I mean his "chump-change"

I keep hoping the government will go on winter vacation. I'm sick of them showing up for work.

I hadn't heard about the Citi nonsense until a supervisor that likes to talk about the market with me most days mentioned that the executives invested their bonuses back into the company to try to prop it up and make it seem like they were actually trying to save it.

I then made the analogy:

"That's like a crackhead buying baby formula so they can pass the home inspection part of getting approved for welfare, then drinking the formula, starving the baby, and going out with the government check to stock back up on the crack."

I thought it was a great analogy...

@Snarkysnake: Citation please. I'd like to discuss this matter with some friends of mine... so sources will be needed. :)

@SweetBearCub:

I've said it here before, but i think that the government's priority should be to preserve assets, investments, and deposits (as well as loans and other debt), but the preservation of the actual financial firms should be low on the priority list.

If we're going to socialize these banks for a time, then there should be a government agency set up to hold and manage these assets and liabilities and work to sell them to firms that have enough liquidity to purchase them.

There is no reason as far as I can tell for 'Citi' or 'AIG' ,as companies, to exist anymore.

@Ein2015: I was interested in this too, a quick google search gave me this: [www.bloomberg.com] Apparently he had a 4% stake in citigroup and helped them once before in 1991, but plans to up his stake to 5% to try to help them again.

Its a done deal already. Lets hope it works out and that the government (we/us) get our money back with plenty of interest.

@SweetBearCub: My question is what happens to your mortgages, car loans, etc when a company like this goes under? Are you suddenly off scott free?

@MA35TRO: *waves hand* I could use 100,000 now too. I could use it to buy a house and you know, stimulate the economy and all.

Ugh. My poor kids are going to be broke for their entire lives at this point. I'm so tired of these bailouts. We're all going to pay for it in the end. And since I'm going to be paying, can I be bailed out? The amount of money I need is pocket change compared to these larger corporations!

I volunteer to be bailed out. I have a fixed (low) rate Citibank mortgage that I'd love to have the government pay off for me so Citibank can concentrate on customers who generate more income for them than I do!

Homebuilders are coming out now with their tin cups in hand.

Bailouts for everyone!
Except our citizens, you guys can rot.

@SweetBearCub: Because they are in cahoots with these companies.

WILL SOMEONE THINK OF THE CHILDREN!!!!..

Sorry. Just seems like something to say.

Anyone else get a letter last week stating that their CitiCard interest rate was going up by 5+ percent (13% to 18%)? I've also noticed that they have pulled back all of their balance transfer offers.

@undefined: @Oranges w/ Cheese: Haha, I've always wondered that. What really happens is that banks don't just go under...they're always bought by somebody, since assets like loans still have value. You are just in debt to whoever buys your failed mortgage holding bank.

Hey, what's the big deal? The government is only risking around $1,000 for each person in the entire US on this gamble.

Surely, if asked, each of us would chip in at least that much for a company that treats us so very well. Right guys?

...guys?

@Oranges w/ Cheese: To expand on my thought, it would be pretty funny to get a million mortgage holders in cahoots, all refuse to pay their mortgages, and run their bank into the ground, resulting in free houses for the whole lot!

/yes I know it doesn't work that way, and someone should burn in hell for doing something like that.

@failurate: I don't have a CitiCard, but I did get a letter that my home equity line of credit was being locked up so that there were no more draws on it permitted. Just payments. Maybe the interest rate letter is next.

@Ein2015:

Prince Al-Walid bin Talal bin Abdul Aziz Al Saud.

This is the guy. Check out Forbes ,The Wall Street Journal etc...
This is well known. He has had a large stake in this bank since 1991.Forbes puts him at 20th richest in the world. how do you feel when you schlepp to your job every day and take crap off of the boss and the customers so that your taxes bail people like this out ?

@Oranges w/ Cheese: Your loans are assets. They go to the creditors. You will _never_ get off scot-free from a loan - unless you declare bankruptcy yourself, which is what these guys are doing.

@Oranges w/ Cheese: Very unlikely. You will owe whoever picks up the pieces. Debt would be one assets sold.

@failurate: We did. We have _always_ paid off our bills at the end of the month - I literally cannot remember ever being late, forget carrying a balance. I think there was a Consumerist article about them reneging on some sort of pledge _not_ to do that, in fact.

However, if Citi feels as if there is some sort of blanket increase in the risk of default by _everyone_, which is not an unwarranted assumption as we hit an economic downturn, then I can't really blame them - it's a rational thing to do. Indeed, if they're getting bailed out by the government, I suppose I should support anything legal that they do to keep profitable.

dear taxpayers,

thanks again!

love,
the new york mets

I think it is kinda ironic I went to make a payment on my citibank visa and, low and behold, their website isn't allowing logins. They said their was supposed to be maintenance from 1am to 8am ET but it's now 1pm. Maybe I should just default and get a bailout since their site seems to be down. What do you all think?

Bailouts, Bailouts, Bailouts.

First Citi, then the Automakers, then who's next after that??

You don't get anywhere by continually throwing money into a black hole.

Let me run with that Vegas example: You had a decent run in blackjack, but then the odds went against your more and you lost a fair bit of money. You're in danger of losing everything and you come to me looking for $1000 to try and win it back, but you have no plans to alter your playing strategy IN ANY WAY.

Instead you convince me that it would not be in my best interests to let you run out of money completely and such an event would be catastrophic in nature so you desperately need the $1000. But of course I have no guarantees that if I give you the money, I'll ever see any of it back.

What happens when later on you come back to me begging for more, having blown through the $1000, using the same argument that the possible consequences of letting you fail should be reason enough for me to cough up more money??

Where does it stop?? We can't fix the economy by continually throwing money at the broken parts. We need proper control and regulations and limitations as to where and how that money gets spend.

The government claims they are doing this but I have my doubts.

With every bailout, the american people get more and more frustrated at their leaders...

@Tmoney02: I agree & Yes. From what I understand, AIG was insuring itself, and somehow this was legit. I don't understand how that can work, but I think that was one of the big problems.

I don't think Citi did the same thing, but it wouldn't be unreasonable to expect some kind of insurance. On the other hand, they completely mis-evaluated the risks involved, so adequate insurance probably wasn't a priority. This is all just speculation on my part.

@scoosdad: Same - except mine is a fixed low rate student loan. But I have a feeling that we *are* the income generators, and will probably be getting quite a bit of attention. I guess this is extra incentive to not be late... or maybe it's a new position of strength? I am tempted to call and see if my rates can be adjusted down. Never considered it before.

In The Know: Should The Government Stop Dumping Money Into A Giant Hole?

This bailout works out to be about $55 per citizen in the US. I think if thats the case, every citizen should be given a number of stocke equivalent to that at this morning's price. It would have worked out to be about 10 shares each. That way if, and when Citi recovers we all get a share of the action.

Hell. The governement can keep the shares, just give me the money off of my taxes at a pre-determined date in the future.

@SweetBearCub: That's easy to say if you're not one of the people suffering. I do not agree that it is worth doing great harm to thousands or millions of bystanders just to punish the dirtbags who ruined these companies, especially when there are ways to save the companies without rewarding the dirtbags.

Has Paulson run the bailouts properly? No. Should there have been sensible regulations in place that would have prevented the worst of the current crisis? Yes. But the idea that any bailout is a bad idea, and that if we just let these firms collapse, and destroy the economy, and bring about mass poverty and homelessness, in the end we will be better off, is just wrong. It is the government's job to regulate markets and moderate their worst aspects.

Letting these companies collapse just gets you a depression. Next year, we can talk about how we keep this from happening again. Right now, we have no rational choice other than the bailouts.

So the GOP believes in the Free Market? HAHAHA! Only for the middle class. Big Business is immune from the free market as the GOP government bails them out, makes laws to protect them from competition, lawsuits and regulations. Note to GOP: you are not helping your cause or Big Business by bailing them out for being lazy, to cheap to invest in research and development or producing a inferior product. You make yourselves look like the co-crooks you are with Big Business while giving your own country the bird.

@jaydez: The Govt. will in fact keep the shares. However, they will not share.

Maybe I should stop paying my Citi mortgage and Citi credit card now. They already have all my tax dollars, fuckers.

Got a letter on Friday from Citibank. They're jacking up the interest rate on my Mastercard from 10.49% to 16.99%. But the joke's on them since I don't carry a balance. If I did, I'd be really, really mad right now. So far, my credit limit is intact....

@Imakeholesinu: I think you are supposed to default and then pay them bunches of money in fees. It's part of their "recovery" plan.

@oneliketadow: Let us know how that works out for you.

@failurate: And interestingly, as recently as yesterday, the front page of the Citicards Web site was still advertising 0% balance transfers. Maybe we'd all get better deals if we were new customers without, yanno, long-established excellent account histories with Citibank.

Wow, now the us is bailing out companies that outsource most of their customer service to India.. nice!

Government bailout is the new bankruptcy!

I work at Citi, and I'm disgusted with almost everything they are doing. If it makes you feel better, the employees get treated like crap as well as account holders/credit card holders/etc.

It's our faults. We allow them to do this by continuing to vote for the politicians that puch this crap through.

What we as citizens should have done is collect all the issues in front of our politicians that have been raging for decades (abortion, drug reform, immigration, etc.) that have not been solved. Take the issues and have one big reforendum - WE the people get to vote on it all. Whatever passes, passes. Whatever doesn't - well, it's now a dead issue.

We should have allowed the bailout only under these conditions. Hell, we aren't getting a share of the loot, but at least we REALLY got our say in what's important to us.

We were going to be on the short end regardless - we should have at least gotten some REAL CHANGE and REFORM out of it.

@savdavid:

Last time I checked, the Democrats have control of Congress and the Senate, so watch where you aim your Blame-O-Ray.

Democrats and Republicans should be equally ashamed at the state of the union.

@jaydez:
Hell, I'd take a $55 credit to my CC account.

So the reward for driving your company to the point of failure is some free money? Oh they say it's a loan..or a bridge, but you know they will never be asked to repay it nor will they be able to. I feel like I am being punished for running a successful business.

I worked on a training project for Citibank in the mid-90s. Some Citibank employees would come to the post-lunch session drunk and fall asleep in their chairs! And none of their coworkers thought anything of it.

Let them all go bankrupt..automakers, Citibank, and the rest. They're not going to disappear, get real. There is too much money at stake and another company will take their place to fill the void. These will be companies that realize there is no magic bailout to save them and that they had better run their company right.

More Bob Rubin

[meganmcardle.theatlantic.com]