Be Afraid

Citigroup Walks the Plank

Is Citigroup next to fail? Yesterday, Felix Salmon called America’s largest bank also its “most dysfunctional.” Since its current CEO took over, it’s lost $20 billion and 70 percent of its market capitalization. Salmon calls it “too big to rescue,” pointing out that no one could possibly afford it and says, should it come to it, Paulson’s only option will be nationalization. Last night, in a separate post, Salmon assured readers that the majority of Citi’s domestic desposits are insured by the FDIC. The real trouble is for those with uninsured deposits held overseas—which make up the vast majority of Citibank’s $773 billion deposits. “If even a large minority of those depositors ends up deciding to move their money elsewhere,” he writes, “then Citi, I'm pretty sure, is toast.”