“The F.C.I.C. is the first to take a close look at the missteps at Citigroup, which virtually every book about the financial crisis has overlooked. It is a devastating portrait of negligence at the top — including the once sainted Robert Rubin.”

-Joe Nocera, NYT, Inquiry Is Missing Bottom Line

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Say it ain’t so, Joe!

How did you miss this? Bailout Nation, Chapter 18 is titled “Too Big to Succeed.” It is about the history of Citigroup, its numerous missteps leading up to the crisis, the role of Robert Rubin and Larry Summers in the repeal of Glass-Steagall, and Citi’s role in the collapse. (Bank of America makes a guest appearance in the last third of the chapter).

It is, to say the least, rather critical.

The Glass-Steagall repeal may not have been the cause of the crisis, but it sure as hell made the damage far worse. It allowed banks to own businesses they otherwise could not, and to manufacture and buy junk paper in quantities far greater than would otherwise have been possible.

When Glass-Steagall was in effect, Wall Street collapses were kept on Wall Street and for the most part, away from Main Street.

Do you remember the devastating credit crisis and recession caused by the 1987 crash? No, because it never happened. As Bailout Nation makes clear, Glass-Steagall was a major factor why.

Anyway, Chapter 18 is posted in our Bookshelf. And in light of the FCIC report, the rest of the book should be next in your queue.

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Previously:
Bailout Nation Updated Reviews

Source:
Inquiry Is Missing Bottom Line
JOE NOCERA
NYT, January 28, 2011
http://www.nytimes.com/2011/01/29/business/29nocera.html

Category: Bailout Nation, Bailouts, Financial Press

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

17 Responses to “No, Not Every Crisis Book Overlooked Citigroup”

  1. Sechel says:

    Gotta love “Too Big to Fail”. We bail out banks that are too big to fail and during the aftermath of the crisis we allow our biggest banks(O.K. not Citi) get bigger, so we’ve replaced “To Big to Fail” with “Too Bigger to Fail”

  2. VennData says:

    Joe may be an Alumni of Evelyn Woodhead’s… speed reading course…

    http://www.themadmusicarchive.com/song_details.aspx?SongID=18466

  3. Petey Wheatstraw says:

    “It is a devastating portrait of negligence at the top . . .”
    ___________

    Negligence. Yup. Criminal negligence. By all of the big banks. Along with some criminal fraud. And conspiracy to defraud. All enabled by regulatory/governmental capture.

    Also, these are the smartest guys in the room — there were and are no missteps. If there had been, we’d be seeing claw-backs, massive civil fines and penalties, and criminal prosecutions. This went off without a hitch. We are being robbed. Looting of the Treasury for the benefit of insiders is now Standard Operating Procedure.

    http://dealbook.nytimes.com/2011/01/28/blankfein-gets-13-2-million-for-2010/

  4. Space_Cowboy_NW says:

    Re:”Also, these are the smartest guys in the room — there were and are no missteps.”

    Just like the dealer knows the cards that are coming before the ‘mark’ sees ‘em…..
    http://biggeekdaddy.com/humorpages/Humor/BestCardTrick.html

    Btw Regarding the premise that ‘Money is Business’ overview:

    http://www.fourwinds10.com/siterun_data/government/new_world_order/news.php?q=1226347501

    An interesting article I would not doubt it’s validity but frankly corruption like this happens everyday without any “Party” distinction. That is what most people find hard to believe.

    “The more corrupt the State, the more numerous the laws”.

    – Cornelius Tacitus

  5. PhilPerspective says:

    BR: Did you email Mr. Nocera and notify him of his error?

    ~~~

    BR: Yes, and he was quite apologetic about the oversight

  6. gordo365 says:

    I’d love to see wikileaks get ahold of all the correspondence tween reuben and citi officials pre and post repeal…

  7. mbelardes says:

    Not only that, there were a few Pre-Crisis books than noted the problems of Citigroup and Glass-Steagall repeal. My corporate law professor Frank Partnoy wrote “Infectious Greed” back in 2005 or 2006 and I seem to remember it dwelling on Citigroup for quite a few pages.

    And I’m in agreement on the Wikileaks release of Wall Street/K Street/Pennsylvania Ave emails and documents for the last 15 years. That would probably unravel America as people realized the biggest Takeover in history is the leveraged buyout of our Government, with us as the collateral. It’s not a conspiracy theory.

  8. Stuart says:

    When it’s deliberate deceit and motivated negligence, it’s something else…certainly not incompetence or naive misjudgement. Time to call a spade a spade here. Rampant fraud. Any report attempting whitewash this little detail by glossing over the motives behind the names of those called out as merely ‘incompetent’ or ‘negligent’, serve to identify themselves as complicit. Do we really believe they didn’t know….really?

  9. louis says:

    Agree with Petey here, this was not a “perfect storm” All of this was premeditated.

    The only thing really missing here is the uproar from the citizenry. Reading the FCIC report reminds me of that hollow feeling I had after watching the 9/11 hijackers walk through security. There were so many checkpoints that failed miserably on this and those in charge are letting it go. That nothing has been done for those left behind on the mortgage battlefield because of the massive lobbying effort of the banks shows the character of our nation at it’s lowest. That we have rewarded such intentional reckless behaviors with a free pass is truly tragic. There are two players in this game and one was allowed to survive. If you call one side out for its reckless speculation you must do it to the other as well.

    If you allow the banks and firms to be bailed out, you must bailout the Homeower.

  10. Francois says:

    Barry,

    Joe Nocera missed everything that matters the most here. He couldn’t even bring himself to write the “F” or the “C” words for crying our loud!

    That said, he did not exercised lots of restraint in blaming the victims.

    http://xrl.in/749s

  11. Francois says:

    OT but related:

    One of the biggest problems afflicting the US nowadays is the stultifying narrowness of the economic and political discourse. Meaning, there are way too many apologists sucking at the teat of the status quo that have unfettered access to the mass media. That is how you have a bipartisan regime in DC that doesn’t need to implement repression, since those apologists, not only control the information that matter, but are just too happy to do the bidding of the powers that be. A careful reading of Joe Nocera’s article illustrate this.

    Another example is this execrable, vapid and inane tripe that passes for a brilliant piece (it must be so, since it will be in the NYT Sunday Edition) of econ writing, courtesy of Tyler Cowen. I assure you it’ll trigger a good laugh…if you can forget that the topic is rather serious.

    Innovation Is Doing Little for Incomes
    http://www.nytimes.com/2011/01/30/business/30view.html

  12. Francois,

    w/this: “…That is how you have a bipartisan regime in DC that doesn’t need to implement repression…”

    cogitate upon: “…Court decisions by “activist judges” in behalf of criminals, abortion, homosexual rights, and against school prayer, all in the name of constitutional rights and civil liberty, have resulted in many Americans identifying civil liberty with procedures that provide protections and immunities for criminals and with judicially created rights that are destroying morality. All the fights over Supreme Court appointments have to do with “social issues” such as abortion. The enumerated rights in the Constitution, such as habeas corpus, due process, free speech and association, long ago receded into the background and play scant role in Senate confirmations of Supreme Court appointees…”
    http://www.informationclearinghouse.info/article27368.htm

    to begin with..

    and, as a tangential, de minimus, slice of, other, related goings on.. http://theintelhub.com/2011/01/29/micro-drones-to-fly-surveillance-missions-over-the-u-s/

  13. mitchw says:

    Barry, am I nuts or weren’t there a lot of very important(Saudi and other Gulf state) depositors who had unsecured billions at Citi? Can you imagine if they had had their hairs cut? Doesn’t sheik Talal have a big stake in Citi, maybe for his rich Uncle?

    ps You were very funny on that RealEstate blog you sat down for.

  14. Francois says:

    MEH,

    “The enumerated rights in the Constitution, such as habeas corpus, due process, free speech and association, long ago receded into the background and play scant role in Senate confirmations of Supreme Court appointees…”

    Let’s go even further: Habeas corpus, due process, free speech and free association are the 4 pillars of the nowadays much maligned Civil Rights. I say “much maligned” because with the “Look Forward Not Backward!”, Obama has singlehandedly commuted to automatic pardon, crimes committed by the political elites and the well-connected. From behaviors that were much excoriated by at least one political faction during the Bush era, we now have a bipartisan consensus, or, at the very least acquiescence. Of course, the abject deference of the high courts to the pretensions of unlimited power grab by the Executive has not helped the cause of civil rights. It won’t take much to see the government grab even more unchecked powers in the years to come.

    I won’t go in all the details but suffice to say that the very concept of the US government claiming the right to indefinite detentions without trial nor charges would’ve been absolutely unthinkable 15 years ago. As a simple exercise, I invite everyone to look backward 15 years ago and try to imagine your reaction if the then President would’ve claim that power…That is how low we have dropped in the meantime.

    And Puhleeeeze! No one will tell me that 10,000 (at MOST) technologically challenged terrorists who are unable to even blow up their own fucking underwear represent a bigger threat than 5,000 nuclear heads pointed at us by a huge country of 300 million + people with industrial and scientific capacity, secret police and spy apparatus all over the globe like the USSR was.

    Yet, the powers that be are building an impressive security apparatus, with laws that are ever impinging on our freedoms.

    Which begs the question: Do they hate our freedoms?…

  15. mbelardes:
    Mr. Partnoy actually has an op-ed in tomorrow’s NYT.

  16. yes, Francois,

    esp. w/: “…because with the “Look Forward Not Backward!”, Obama has singlehandedly commuted to automatic pardon, crimes committed by the political elites and the well-connected. From behaviors that were much excoriated by at least one political faction during the Bush era, we now have a bipartisan consensus, or, at the very least acquiescence…”
    +
    “…Of course, the abject deference of the high courts to the pretensions of unlimited power grab by the Executive has not helped the cause of civil rights. It won’t take much to see the government grab even more unchecked powers in the years to come…”
    ~~
    though, w/this: “…tell me that 10,000 (at MOST) technologically challenged terrorists who are unable to even blow up their own fucking underwear…”

    see some of http://www.sott.net/articles/show/200106-The-Underwear-Bomber-Crushing-Freedom-With-Phony-Arab-Terrorism