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The Citi dump

City landfills aren’t pretty places. Much the same can be said for Citi Holdings, the newly formed dumping ground for Citigroup’s most ailing and malodorous assets.

Earlier this year, the de facto government-owned bank created Citi Holdings as a repository for assets that it either planned on selling or would simply have a hard time giving away. In truth, Citi Holdings really isn’t a distinct company. It’s merely part of a PR strategy to get investors to focus on the businesses that are going well at Citi and which are housed in a so-called good bank called Citicorp.

But Citi Holdings holds the key to gauging just how long the bank will remain a ward of the state.

Now technically, things looked good at Citi Holdings in the second quarter, according to the results released today. But that’s only because Citi Holdings benefited from the closing of the Smith Barney joint venture with Morgan Stanley.

Tax Goldman debate heats up

The idea of taxing Goldman Sachs and other banks that engage in prop trading is heating up.

I fully endorsed the idea in a column on Thursday. (i amended my thoughts a bit from earlier in the week). FDIC Chairman Sheila Bair seems to be talking about a similar bailout tax concept. And we may hear more from Bair on the subject next Thursday when she is set to testify before the Senate Banking Committee.

The Factor

Don’t worry this is not a column about Bill O’Reilly, the voluble Fox News personality. No, what I’m talking about is the bread-and-butter business of CIT Group, the mid-market lender now limping along on life support.

The Wall Street Journal today wrote one of the first decent articles discussing CIT’s importance in the world of factoring–an ancient form of business financing that CIT long dominated in the US.

CIT timing not the greatest

Though, I’m not sure if it would have been better for the talks between CIT and the government to break down last week either. The pairing of almost certain bankruptcy of the little guy lender with the blow-out earnings of Wall Street giants, JP Morgan and Goldman Sachs, makes a strong argument for smaller financial institutions to beef up their operations so they, too, can be too big to fail.

I hope Geithner and Bernanke are preparing their defense for the populist backlash.

The AIG bailout was about Europe

It makes for a much better storyline to say the federal government’s bailout of AIG was all about saving evil Goldman Sachs from collapse. But the reality is the bailout was driven more by a desire to keep scores of European banks from taking massive capital hits.

Don’t believe it? Well, look at the latest regulatory filing from American International Group about the derviatives mess caused by its AIG Financial Products group. In the late Monday filing, the defacto government-owned insurer talks about its potential exposure to “market valuation losses” in its $192 billion “regulatory capital credit default swap portfolio…written for financial institutions, principally in Europe.”

Seacoast’s deepwater stock sale

Seacoast Banking Corp. of Florida is in a pickle.

The tiny bank with under $3 billion in assets is one of a handful of lenders that are so cash-strapped they’ve not only stopped paying dividends to shareholders, but to Treasury as well. The Wall Street Journal reported today that Seacost and two other small banks are no longer paying dividends on the preferred stock they gave to the federal government as part of Troubled Asset Relief Program capital infusion.

On May 19, the bank stopped paying dividends to all its various classes of shareholders.

What about those Goldman bonuses?

Will Goldman Sachs have its best year ever in 2009? Will it payout record bonuses? Maybe. Then again, maybe not.

The financial press went gaga this morning over a report in The Observer that Goldman employees “can can look forward to the biggest bonus payouts in the firm’s 140-year history.” The British paper had no real numbers to back up its claim, just the predictions of “insiders at the firm.”

Putting the bailout in (scary) perspective

For those finding it exceeding difficult to get a handle on just how much we’re spending to keep the financial system afloat, Barry Ritholtz over at The Big Picture has a nice graphic that will make you gulp. While it’s necessary to spend like a drunken sailor during a financial crisis and it’s fantastic to see financial markets stable again, it’s also important to keep the cost in mind.

Wall Streets waits for Godot

Stocks, for little over a week, have been stuck in neutral.

On June 4, the Dow Jones closed at 8,750. And with a little less then two hours to go in the current trading week, the Dow was trading at 8,759. Come on, we can do it. All we need is to drop another 9 points.

That said, it’s not as if there’s been no news over the past 8 days. Last Friday we had the mixed bag unemployment report. On Tuesday, Treasury announced that 10 banks would be able to payback $68 billion in federal bailout money. And today came news that consumer confidence rose to its highest level in nine months.

Repaying TARP….not so fast

The Obama administration is on the verge of letting a number of financial institutions–think Goldman Sachs and JPMorgan Chase–to begin paying back tens of billions in bailout money. That may sound like a good idea, especially with the federal deficit continuing to balloon. But what’s the rush?

It’s obvious why the banks want to get out from under the Troubled Asset Relief Program: they want to be free of government meddling and prove they can operate without government support. But Sandy Lewis and William Cohan, in a long op-ed in The New York Times on Sunday, make a good case for the administration going slow in allowing banks to repay the bailout money.

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