Citigroup (NYSE:C) Is now the center of attention now within the financial sector. Of course it’s expected since they too were doing what the rest of the industry has been doing for the last few years.
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Over the weekend the Federal Reserve and the Treasury department have been talking on how to stabilize the company. The discussions are still going on and not much more is being revealed. Speculation is that they are thinking of assuming some of the risky assets held by the company. As with the rest of the trouble assets that the government has taken over from the other troubled banks. Removing the assets off of Citigroup’s balance sheet will give them the chance they need to put them in a better position to do business and raise capital.
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From all the news coverage I’ve followed over the last few days, Citigroup has declined to comment.
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I was on vacation last week and while spending my time with my family, I didn’t follow any news, but to come back to find out that Citigroup lost nearly 60% of their stock value brought me back to reality real quick. Having Citigroup collapse could possibly bring the end to the entire sector. They are too intertwined within the sector.
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When you think about it, it shouldn’t be a surprise that this is happening. Look what happened to Citigroup last month when they tried to acquire Wachovia (NYSE:WB). They lost the opportunity to Wells Fargo Corp (NYSE:WFC). They are no longer the big dog on the block. As a matter of fact they are probably the most vulnerable of all the financial institutions out there.
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Who knows what is to come this week. Last week the DOW lost 5% and that’s after the 500 point gain on Friday. I’m going to catch up on the thing I missed and watch the action from the sidelines.

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With all the talk about the state of our economy, Obama being more of a socialist-type leader and the out-of-control bailouts, one wonders what is the idea of capitalism that this country was built on.
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Wikipedia defines capitalism as,”Capitalism is an economic system and a form of society, in which resources are controlled by private power, as opposed to a state or public institution.” (to read the rest…)
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If we are to survive as a capitalist country and continue what our fore fathers started two hundred and thirty two years ago, we must stop saving companies that are not doing the right thing to make it in the market.
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The government should have never started with all this financial assistance to save companies that have been doing the wrong thing to make money. Things that could be considered morally wrong and legally questionable at best. If a board of directors want to give millions of dollars to a man that makes decisions that will eventually cause the company to lose billions of dollars, well then they get what they ask for, bankruptcy.
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The big three automakers are another set of companies that should face the music like all other smaller companies must face if they don’t do the right thing to preserve their future. Chrysler became a privately held company about a year ago. The company choose Bob (corporate raider) Nardelli to be the CEO. If you guys are not familiar with Mr. Nardelli let me give you some first hand insight.
In the six years that Nardelli was the CEO of The Home Depot he removed more associates from the floor as well as eliminating many of the employee benefits. In effect of his decisions he ruined the customer service that The Home Depot was known for and help them stand out amongst the competition. How do I know this? I worked for The Home Depot before he got there and was there after he left. As a matter of fact, they fired him to get rid of him knowing that they would still have to give him $209 million departing package.
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Let’s get back to capitalism. If this is the way the government is going to start defining the meaning of the word, well then I suggest that if you have a company the isn’t making the money that it needs to make payroll and pay your suppliers, go to Washington and ask for a bailout.
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I don’t know about you, but I go into business to make money and I have only two choices… to either make it or break it and if I break it, it’s my problem not anyone else’s.

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Today five of the most powerful men in the hedge fund world are in Washington speaking to the Oversight committee. The were invited (told) to testify in Washington to the effect that hedge funds had in the economic crisis that is upon us now.
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George Soros Of Soros Fund Management, John Paulson of Paulson & co., Jim Simons of Renaissance Technologies along with Citadel Investment Group’s founder Ken Griffin appeared in front of Committee Chairman Henry Waxman.
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Ironically they agree that there needs to be more transparency from the industry of secretive funds. They also gave different views on whether or not they contributed th the financial crisis. George Soros di say that hedge funds were part of the reason for the financial bubble. Mr Soros wrote in a statement “A deep recession is now inevitable and the possibility of a depression cannot be ruled out,” sent to the Oversight and Government Reform Committee hearing.
This is the ma who is know for betting against the British pound back in 1992 and recently backing Senator Barack Hussein Obama for President.
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The Committee wants to hear from the leaders in the hedge fund industry about the role of these funds as well as their tax status and regulation. Oddly enough when the financial and economic world was falling apart, these gentlemen made on average $1 billion last year. That is also why they were called to appear in Washington.
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“Currently, hedge funds are virtually unregulated,” Waxman said. “They are not required to report information on their holdings, their leverage, or their strategies. Regulators aren’t even certain how many hedge funds exist or how much money they control.”
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I don’t know about you but this is quite fishy. Why is it that these guys can do what they do and not have to be accountable for their actions? Yes I know that many of them are operated outside of the United States, but they trade in U.S. currency and it’s assets.
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I also know that they are not the only reason for the collapse of the financial industry. Most of that blame does have to fall on the managers of those institutions, rating agencies, investment banks as well as the people who over-extended themselves with credit.
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As to the regulations that were non-existing for the last several years. Most of that blame must be put on Congress, the Treasury Dept. and the Federal Reserve. It’s their job to keep things in order. Unfortunately, many of those politicians were re-elected. Barney Frank, Henry Dodds along with Obama who was able to deflect most of the blame during the election. We will have to wait until 2010 before we have a chance to remove some of these lazy, elected government officials.
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David Ruder, a former chairman of the U.S. Securities and Exchange Commission tried a few years ago to force the hedge funds to register with the agency, but failed was also present at the hearing.
“Although hedge funds have been active participants in the financial markets during the past years, they do not seem to have played a major role in the events precipitating the crisis,” Ruder told the hearing.
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The men who were summoned to the hearing today are some of the leaders in the hedge fund industry. These guys are known by playing by the rules. The bad thing is that there aren’t that many rules for them to follow. Many of the hedge funds that we’ve been hearing about going under are the less respectable ones. The ones that don’t really follow any rules and leveraged the hell out of their funds.

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