Busted: Bankers and The Global Economy

May 11, 2008

Citibanks’ Magic Move

Filed under: banking, investment, money — Tags: , , , , , , , , , — digitaleconomy @ 12:18 am

Citibank excitedly announced that it will sell off almost 1/2 billion in bank assets immediately. Citibank and bankers worldwide are looking for good news under any rock they can find it. In this case, shedding whatever they are holding of value is a new way to create capital.

New CEO Vikram Pandit and much of the media tried to put a positive spin on the latest move by the megabank. We can be comforted to know that when Saudi Arabia no longer considers additional investments a reasonable proposal that banks have assets to dispose of to keep themselves solvent. The New CEO has a plan to move more assets in the future. Mr. Pandit says the assets are aggressively priced as the company seek risk reduction.

Bankers and other investors should take serious care of their enthusiasm as Citibank seeks to divest themselves of risky investments that they hold at reduced prices. This sounds akin to paying for shooting yourself in the foot. Perhaps someone with financial literacy will find a few deals though. Making money from subprime securities is an especially risky move for anyone but the most crafty investor with money to blow. Pandit has the audacity to try.

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