Maybe I'm jealous that Citigroup didn't include The New Republic on the
list of publication in which it had placed full-page advertisements
telling the public "why now, more than ever, you can be confident
that Citi never sleeps." The I'm looking at now is
in Sunday's New York Times. But I've seen the same
ad in a few other newspapers (including my home-town sheet, the Boston
Globe). I assume this is a cross-country effort.
The advertisement is roughly 150 words. It tells you that it is
"using our global presence, knowledge and expertise, along with
almost 200 years of experience, to rise to the challenges and take
advantage of new opportunities."
"That's why," the ad assures its readers, "200 million
people around the globe have put their trust in Citi..." and so on
ad nauseum.
Which, of course, is sheer nonsense. Also desperate. And
probably mendacious. No, not probably. Certainly. Isn't there
a truth-in-advertising law?
In the midst of a nearly five hundred point rally, Citigroup fell to
$3.87 at the Friday close. This was not in response to two
devastating Times articles. The first , which came out on
Sunday and was written by Eric Dash and Julie Creswell, goes through the
history of the bank's exposure to what the paper calls Citigroup's
"Exotic Investments." In 2007, Citigroup held about 12%
of the debt obligations distributed among all the other financial
institutions in the world. They were called CDOs, with the
"C" standing for "collateralized." Well, I
guess, they weren't collateralized enough.
Who's to blame? The bank's top executives, of course. And,
alas, Robert Rubin who has the charm knack of sloughing off blame.
But read the Times and see why he is no innocent.
The second Times piece just came over the web, and it will be in Monday's
edition of the paper. Written by the same Mr. Dash with a new
partner, Gretchen Morgensen, the article reveals that the feds are
contemplating adding God only knows how much to Citibank's recent take of
$25 billion from the $700 billion bailout fund. I don't know
how what remains in the cooler. But Dash and Morgensen suggest that
the authorities are contemplating seeking new financial authorizations
for Citigroup and other institutions (and industries?) down the
pike.
The fact is that Citibank's stock fell 87% this year. Blame it on
the "shorts" if you insist. But the bank's troubles are
enormous, and its size and 56 varieties make them also more
complicated. My guess is that top management didn't know what the
hell was going on.
In Sunday's Times "Week in Review," Tom Friedman makes a
provocative proposal that President Bush ask Henry Paulson to resign and
that he appoint Timothy Geithner in Paulson's stead as secretary of the
treasury. The country should not have to wait another two months
for the new administration to put its plans in action. This would
be a true act of patriotism on Bush's part, and one that everyone would
recognize. Of course, Bush would remain president. It would
be like the British "war cabinet" that operated under Winston
Churchill and contained figures from the Labor opposition. But the
Democratic opposition has already been voted into office.
There might be some formal awkwardness. But the American economy
and the ravaged economies of friends and adversaries would all benefit
from a one-up in November rather than wait till January 21.