Phil's Stock World

Newspaper O Estado de Sao Paulo reports that the Brazilian Minister of Mines and Energy, Edison Lobao, revealed today in New York that at the height of the crisis Brazil almost bought Citibank:

"We could have bought and could have had great profit, in addition to prestige," he said. The minister said the decision not to acquire the bank was made by the government as a whole.

Mr. Lobao said that before the U.S. government had bought a third of Citi, the institution sought the Brazilian authorities. He said he did not know the "fair price" which was discussed with Brazil, but, considering the size of the country’sreserves, the country could have purchased a share of the institution.

In late July, Citigroup completed the exchange of securities of $60B that made the U.S an owner of a third of the bank. All the $ 20.3B in preferred stock and hybrid securities and equity securities issued publicly by Citi were exchanged in the offer for common shares, while the federal government shifted about $39.5B of preferred stock for new bonds.

Banks ‘Too Big to Fail’ Have Grown Even Bigger

When the credit crisis struck last year, federal regulators pumped tens of billions of dollars into the nation’s leading financial institutions because the banks were so big that officials feared their failure would ruin the entire financial system.

Today, the biggest of those banks are even bigger.

The crisis may be turning out very well for many of the behemoths that dominate U.S. finance. A series of federally arranged mergers safely landed troubled banks on the decks of more stable firms. And it allowed the survivors to emerge from the turmoil with strengthened market positions, giving them even greater control over consumer lending and more potential to profit.

J.P. Morgan Chase, an amalgam of some of Wall Street’s most storied institutions, now holds more than $1 of every $10 on deposit in this country. So does Bank of America, scarred by its acquisition of Merrill Lynch and partly government-owned as a result of the crisis, as does Wells Fargo, the biggest West Coast bank. Those three banks, plus government-rescued and -owned Citigroup, now issue one of every two mortgages and about two of every three credit cards, federal data show.

Now that’s a sweet deal – boost your market share in originating what are essentially "no-risk" loans because, either wards of the state Fannie Mae and FreddieMac will buy the loans or you’ll get bailed out if things again go awry.

If you’re a big bank, what’s not to like about that?

It seems that the lines between the U.S. Government, the Federal Reserve, and the nation’s largest banks are becoming even more irreparably blurred.

A year after the near-collapse of the financial system last September, the federal response has redefined how Americans get mortgages, student loans and other kinds of credit and has made a national spectacle of executive pay. But no consequence of the crisis alarms top regulators more than having banks that were already

Free Sign-Up Required

Provide your name and e-mail address to access limited content. If you have an account, click here to log in. Or, to read full articles now, along with Phil's live intra-day comments, live trading ideas, Phil's market calls, additional member comments, and other members-only features - Subscribe to Phil's Stock World by clicking here.

First name

Last name

E-mail

Account Created - Please Log In

Please check your email for your new username and password and enter them here.

Username

Password

Free Sign-Up Required

Account Created - Please Log In

As Seen On:

About Phil:

About Ilene: