Courtesy of Pam Martens.
It’s so crazy that one’s first instinct is that it must be a spoof web site. It reads:
“A Citibank International Personal Bank FX Leveraged Loan Account can help you maximize the most of what you have. It allows you to borrow up to 5 times your deposit balance to trade in foreign currencies, so you may increase your potential investment power.” (The italics on deposit balance are ours.)
It turns out that this is a real Citibank offering, a real Citibank web site, and there is a similar deal being offered in Hong Kong by Citibank – one of Wall Street’s largest banks – a bank that appears hell bent on setting a Guinness World Record for the most screw ups in one decade.
Putting aside the fact that Citigroup, parent of Citibank, is under investigation for potentially helping to rig foreign currency trading with other global banks, there is the fact that Citigroup simply cannot afford another hit to its reputation – like inducing bank depositors to gamble with five times leverage in the highly complex foreign exchange markets.
A quick refresher is in order. Citigroup is the successor to National City Bank, blamed by Senator Carter Glass of Virginia in 1929 as playing a major role in causing the stock market crash which led to the Great Depression. In 2011, the Financial Crisis Inquiry Commission reported that Citigroup played a pivotal role in the 2008 financial crash, writing further that: “The Federal Reserve Bank of New York and other regulators could have clamped down on Citigroup’s excesses in the run-up to the crisis. They did not.”
In 1929, the business model worked like this: National City Bank made bad loans and packaged them up as securities and sold them to unwary investors. Last month, Citigroup paid a $7 billion fine for making bad loans and packaging them up as securities and selling them to unwary investors.
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