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.
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.
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.
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.
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.
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.
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?