Citigroup Has Been Paying Out More than It Earned for Years; Now It Has $102.5 Billion in Debt Maturing within Three Years

Michael Corbat, CEO of Citigroup Since 2012

On June 24 Bloomberg News reporters Lisa Lee and Shahien Nasiripour dumped a bucket of cold water on Fed Chairman Jerome Powell’s official narrative that the mega Wall Street banks are “well capitalized” and a “source of strength” in the pandemic.

The Federal Reserve, and particularly the New York Fed which wore blinders leading up to Citigroup’s blow up in 2008, are walking a delicate tight rope in reassuring the public that all is well under their watch versus what any first year accounting major can see is happening on the mega banks’ balance sheets.

The Bloomberg News article revealed the following about the dividends and stock buybacks at Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo:

“From the start of 2017 through March, the four banks cumulatively returned about $1.26 to shareholders for every $1 they reported in net income, according to data compiled by Bloomberg. Citigroup returned almost twice as much money to its stockholders as it earned, according to the data, which includes dividends on preferred shares. The banks declined to comment.”

Sitting on their hands while Citigroup turned itself into a basket case is exactly what the New York Fed’s bank examiners did in the leadup to the last financial crisis of 2008. The answer from the Fed was to secretly funnel $2.5 trillion cumulatively in super cheap loans to Citigroup from December 2007 through the middle of July 2010 to resurrect its sinking carcass, which landed its stock in the dollar store at 99 cents by 2009. On top of the secret Fed bailout to Citigroup, the bank also received $45 billion in equity infusions from the U.S. Treasury; a government guarantee of over $300 billion on its dubious “assets”; a guarantee of $5.75 billion on its senior unsecured debt and $26 billion on its commercial paper and interbank deposits by the FDIC. Tally it all up and it was the largest bank bailout in global banking history.

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Citigroup Has Been Paying Out More than It Earned for Years; Now It Has $102.5 Billion in Debt Maturing within Three Years