Citi Bank Complaint: U.S. Govt is Too Strict On Us

After running the bank into the ground (see chart at the right for losses incurred over the past 5 quarters), Citi bank executives are complaining that the U.S. government is being too strict on them under the terms of the tax payer funded bailout.

This is like the kid who burns down his parent's home (and the entire block) and then complains when they take the matches away.

Citi's CEO, Mr. Pandit, has apparently met with everyone from
President Obama's National Economic Adviser to U.S. Representative from Manhattan looking for some sympathy.

But there still seems to be some who are having fun at all of this carnage. The Wall Street Journal reports:

" The scrutiny has Citigroup executives second-guessing everything, right down to the fresh-baked cookies offered at a recent corporate retreat in Armonk, N.Y."

Some of these bank executives just don't understand what they've done and how their actions have impacted our lives..

Blue Print for the Future from President Obama

A little detour with this post to talk about President Obama's speech to the country last night.

Last night the President addressed the country and spoke clearly about what ails us and put the economic problems into perspective:

"The fact is, our economy did not fall into decline overnight. Nor did all of our problems begin when the housing market collapsed or the stock market sank."

By giving context he helped us all understand that there are multiple challenges and they must be addressed in parallel, not one at at time.

The example that comes to mind is from my college days. All students know that they cannot focus on just one class. No matter how much trouble that once class is giving you, you have to also study and prepare for the others . . . if you want to graduate.

And thinking about the future is important because investors and entrepreneurs will not take risks and resume normal economic activity if they cannot look beyond the immediate crisis.

This is a psychological effect - and it is real. There is nothing worse (or better) about U.S. business today than before we started to hear about sub-prime mortgages and credit default swaps back in October 2008. What's changed is that more information is available and it has spooked all of us.

Another U.S. President showed us once again last night that the only thing we have to fear is fear itself.

He continued, outlining a 3-part plan that will solve 3 big challenges the U.S. has put off for decades. He called it a "blueprint for the future":

1. On Energy - "We have known for decades that our survival depends on finding new sources of energy, yet we import more oil today than ever before."
2. On Health Care - "The cost of health care eats up more and more of our savings each year, yet we keep delaying reform."
3. On Education - "Our children will compete for jobs in a global economy that too many of our schools do not prepare them for."

Once again we have a President of the U.S. that is giving some hope that a better future is both possible and is already in the works.

Consumer Confidence All-time Low, Stocks Rise Sharply

American consumer confidence hit a historic low today. Or at least so says a survey.

(Background: The Conference Board reported today that its February consumer confidence index fell to a historic low. The survey is based on a sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS, a very large Dutch media company.)

How low is confidence? The # cited in the survey is 25, in 1985 it was 100.

Another survey of sorts, the stock market, rose sharply this afternoon. The Dow Jones Industrial Average rose 3.5% (and climbing) as of around 3pm Eastern Time (US). Yes, that's a huge turnaround from yesterday.

Was there any other news? Yes, one thing, Fed Reserve Chairman Bernanke said he doesn't think banks should be nationalized even though the biggest among them (Citi and Bank of America) are worth less than the billions the U.S. government gave them as part of the TARP plan.

Mr. Bernanke had no other solution to offer.

So what's going on here? Answer: no one really know. Sure there will be a lot of talking (heads) on CNBC and Bloomberg and headlines in tomorrow's newspapers about the stock market rebound, but there really is no reason for enthusiasm. The insolvent banks are still insolvent and there is no solution on how to make them healthier.

“The measures taken by the Federal Reserve, other U.S. government entities, and foreign governments since September have helped to restore a degree of stability to some financial markets.” - Mr. Bernanke

With what can only be called "irrational exuberance" Mr. Bernanke's comments seems to be following in the footsteps of his predecessor - blind belief in the ability for things to work themselves out.