The FDIC Takes Over a Bank
I made a juvenile joke the other day about the Northeast taking over Commerce and Freedom in Georgia. But the reality that banks are being taken over by the FDIC all over the country is no laughing matter.
FDIC allowed 60 Minutes to follow it as it closed down one small bank–watch the YouTube to see how it works (in this case it was fDiC taking over our Heritage, ha ha).
Two things, though. First, notice Sheila Bair’s reaction to two questions: how many more (she didn’t answer, "tons") and why not Citi (she didn’t answer, "we’re not equipped to take over Citi yet"). If I were Sheila Bair, I’d already be having nightmares about FDIC’s upcoming feast on Citi.
As to the latter point, remember this video shows a five branch bank being taken over, and the FDIC stationed 8 FDIC employees at each branch when they did the simultaneous takeover. How many branches does Citi have? This says 1,400, plus 3,800 ATMs. So 8 employees for all 1,400 branches, and the FDIC needs at least 11,200 employees just for the takeover, even before you get to runs on the ATMs and the website and the infrastructure (and given the global reach of Citi, "simultaneous" gets more challenging). I guess that’s why they’re hiring in big ways.
Anyone know what happens if/when Citi is delisted from the NYSE?
Don’t you think they’ll keep lowering the delisting amounts?
If the FDIC is going to take on Citi, they are gonna need a bigger boat.
Ha HA HA Great!
Gee, where do I apply. Steady, long term employment, health care, dental, good pay, retirement. Mmmmmm, gooood.
Yeah, that was my thought, too. I’m scheduled to retire, but if the DOW hits 6,000 and my retirement funds tank, maybe I’ll retool my resume for the FDIC.
Bob in HI
Arbusto…. usajobs.gov will be the place!
No — FDIC does their own hiring, as an independent agency of the federal government, and you can apply online.
As I noted the other day, there are a lot of jobs to choose from.
Heck, that sounds like it’ll last longer than a census job too!
Right next to my standing order with the Easter bunny is the hope that this logistical math says it all about why we keep getting arcane bailouts and things of shreds and patches from our wandering minstrels Bernanke, Geithner et al. (wasn’t Bair’s response to “why not Citi” a wonder!).
Notice the stealth and co-ordinated movement of that Heritage job that was necessary to keep a) worried customers from starting a run that would’ve made the situation much worse; b) implicated managers, if any* from flushing the evidence. An uncontrolled plummet into the sinkhole would obviously be as bad as a strategic giveaway —so maybe you can’t take the risk that a big counterparty failure, say AIG or some vengeful so-and-so who’s linked to both them and Citi, would take Citi out until you’re ready with the troops. Et cetera.
It will be good to get this done before we get treated to a short-straw revival of The Banana Man magic act.
====
* I don’t know anything about Heritage, and have no idea whether any wrongdoing is suspected. But as I understand it, FDIC doctrine is to cover that possibility in all cases by moving in carefully.
IIRC, the FDIC has a Criminal investigation division for such purposes.
Bob in HI
They do. They get referrals from the shut-down people, among others.
And it looks as if we’re inching toward the top banana act, if the reaction to this story will let us continue to inch, that is:
‘Cause Yves’s remark is absolutely correct:
Bear should have been strictly a one-timer, and recall, was so close to bounds of legitimate Fed action that amends in the form of a plan should have sailed out the chute soon thereafter. But seems to me that all the quejas de los reguladores we’re getting about how there never was a company like Citigroup is obscuring the fact that at least we do know how to unwind a depository, and I believe we know also how to separate one from its collapsing holding company, though I’d have to rifle some history there to be sure. As I said above, maybe they need to vamp for a few more choruses, but how many more stories like the link can go out there before one of them sounds like a starter pistol?
[Wow! Edit! Wonderful! Thanks!]
… among other things, like court ordered record retention, massive fed forensic accounting investigation, etc etc.
AFAIC this thing gets worse & worse as each layer removed (most of ‘em predictable BTW), and even now we’re still xxx layers from getting the truth. Obama hasn’t done anything to change course, & it’s already threatening to doom his presidency.
I saw clip of Carl Rove yesterday saying Bush had nothing to do w/TARP, that descision was made in a closed room w/3 guys:
Bernacke
Paulsen
Geithner
I presume it unnecessary to explain where Mr. Rove went with that. Very, very depressing to listen to that *&%$er and have to agree…
I posted (2nd half of that post) on latest $$trillion TARP black hole the other day, again… something entirely predictable for those who’ve dissected this mess, yet this type of thing (eg. fed/treasury bailing out WS fraud) as yet unaddressed, and most of US public doesn’t know it.
In essence, Paulsen’s appeal to congress for TARP was a backdoor refinancing for the institution (and couple others) he was recruited from. And the more data that drips (drip, drip drip) out, the more clear it becomes he (and Bernacke, and Geithner…) had/have no clue what they we’re facing/the mechanics/the fraud/the scope, and it seems, the cumulative consequences.
Unbelievable to me that in this, the supposed “post enlightenment” era, this kind of massive shell game can masquerade as meaningful policy… manipulated by handful of talking heads leading the masses by the nose.
Mind boggling.
Hmm…. If I had this problem, I’d approach it like this. There’s no way the FDIC could hire and train enough people to take over a bank as big as CITI and you wouldn’t want to anyway because it’s a temporary problem. I’d look around and think about what other federal agency could help out. You’d need an agency with a large, professional, reasonably well-educated workforce that’s tight-lipped. They’d also need to be spread out across the country and used to conducting large-scale operations.
Anybody want to take bets that there’s an interagency task force looking at using the FBI to help out with a task like this?
Reduce security at airports, take the Homeland Security staff and
sic ‘em on Citi and the banking (wrecking)crew…
Airports? What about all those Border Patrol Agents swarming our Southern Border? And raiding people with jobs who happen to be brown? Who needs them? They aren’t stopping terrorists. I live in a border state and see plenty of them, sitting in vehicles and driving around.
Of course, we could get a job laying fence along the border, but Boeing has that work locked up…./s
FBI, SEC, Treasury, . . . plus a crew of the best tech folks you can find (perhaps NSA or DOD?). With a bank as spread out as Citi, taking control of the computers swiftly and cleanly would be critical.
I’d actually recommend using Citi’s own computer folks. We nerds rarely have much allegiance to the companies we work for, we aren’t exactly known for standing up to the kind of pressure the feds bring, and somebody in IT always knows where to look for funny business. That’s why I always advise management to remember to never piss off your nerds.
Oh, they’ll have to work with Citi’s own inhouse techs, but someone from the FDIC will have to be guiding the process and looking over their shoulders. But you’re right: having the cooperation of the local IT folks will be critical.
The question I have, spanning the tech and non-tech folks alike, is when/how this might be done. If you are talking about a bank with branches in all North American time zones, how do you swoop in “five minutes before closing time” to take control of everything with minimal disruption to customers? Closing time in the east would still have branches open in the west, and by closing time in the west, everything back east will be locked up and the lights turned off.
If it’s going to happen to a bank the size of Citi, they are going to need not just a bigger boat (h/t bmaz) but also a much more complicated plan. Thus, I’d look for it to happen — if it does — over a LONG weekend, because they’re going to need every bit of time they can get to handle it all.
Ralph Nader on the “Bottomless Bailout”
http://informationclearinghous…..e22171.htm
“Where are the skilled people to be hired by the federal agencies—the administrators, field implementers, auditors, financial whizzes able to understand the complexity of greed and over-reach; the inspectors, prosecutors and contract negotiators to name a few categories?
In other words, how are a hurried President Obama and his deputies going to rapidly build up the infrastructure of the federal government itself to advance all these “public works” efficiently and to avoid expenditure disasters amidst a potential orgy of waste, fraud and abuse by the coast to coast recipients?
So many of the federal government’s functions have been contracted out to corporations and consulting firms under Clinton and the Bushes that there is a serious dearth of skilled civil servants. Moreover, Obama has indicated he wants this work done by an accountable government and not by Halliburton-type outside contractors at greater expense to taxpayers.”
at least someone is hiring…
Only slightly off topic: Josh Marshall posted this from a reader late last night:
Here’s my next question, though: aren’t most of those bondholders holding not traditional bonds – straight debt from straight borrowing at whatever interest – but derivatives of and bets on those traditional bonds? And that being so, wouldn’t government, once the banks went into receivership, be able to institute rules that make holders of “real” bonds whole, and pay off the derivative gamblers at pennies on the dollar?
And if that in turn is so, doesn’t every day the government fails to bite the bullet mean another bunch of billions paid back out of taxpayer funds to the derivative gamblers rather than the institutions that made good faith investments?
Then Josh follows up with this:
I guess I’m glad I didn’t read this just before going to bed last night.
Dear President Obama,
How are you? Tomorrow will mark your first 50 days in office. And, so far, you’ve only done The Easy Things. You’ve done the easy things at a time when We may be mere months away from millions of Americans wandering our streets – jobless, penniless and homeless.
The early sign of trouble was your transition from *Fabulous Campaign Rhetoric* to Appeaser of the Right – in a situation where You had All the Power. Isn’t it clear, yet, that the Right isn’t going to support your plans – no matter what – as long as the Bush-era Republican-Neocon Ideologues (Aunt B McConnell, Hooded-Eyes Boehner, El Rushbo and “Spank ‘em!” Dobson) control their Party?
Here’s my 2 cents worth of advice: Take Decisive Action Now!
My suggestions, fwiw, in order of priority –
1 – Pin Torture, and the Torture Regime, directly to George W. Bush – Tomorrow wouldn’t be soon enough. Your Republican Obstruction problem will disappear right away, along with their whole wretched Party – the Party of ‘No’ – by 2012. As long as you Do Nothing, Bush will remain the Sarcoma that is steadily killing the Body Public. Why are you protecting One of the Most Heinous Monsters in Human History?
2 – Enact an FDR-like safety-net Jobs Program – CCC and WPA all over again – right away. Have it up and running by mid-summer – plan for a peak load of providing 10 Million jobs – which would cost approximately $75 Billion per year – cheap compared to throwing a Trillion Dollars at Wall Street in order for a few bucks to ‘trickle down’ to the rest of US.
3 – Nationalize the Banks – just do it. There’s No Way we are going to have confidence in a Wall Street that Knowingly robbed our Retirement Investments and stole our Home Values. It’s a head-scratcher to see you trusting them when the rest of US can plainly see They Are Just Greedy Criminals.
Finally, time is of the essence – We need You to be a Decisive Leader Now – it’s time to Stop the Appeasing Talk and do The Hard Things – Our Country is counting on you! Another 50 days of the same namby-pamby, and you’ll be presiding over 4 years of Suffering Greater than Any in Our History.
But, if you step-up – We’ll step-up with you.
Now is the time for Action!
Welcome home; where you been?
To deal with Citi, they’re going to have to take a different approach. They can’t possibly have enough people to put even 1 per branch and that doesn’t even include foreign branches.
They’ll have to take the head and leave the body. Their first step will likely to be to occupy (for lack of a better word) all the Citi data centers and regional headquarters. The bank will still operate as Citi and the fed will come up with some euphemism to make it look like this isn’t really a takeover. Then you’ll gradually see branches “sold” to other banks under the direction of the new management.
It’ll take a year to take it over. And I’ll bet that most folks won’t even realize what’s happening.
How long it will take to untangle is anyones guess.
Boxturtle (The techs will work with the FDIC without hesitation)
sheila Bair “it’s going up, 16 all ready this year”
Small correction: I believe that is (or was) the Freedom Bank in Commerce, GA. Commerce is northeast of Atlanta. Other fun places in GA include Mayday, Climax, Enigma and my favorite, Ty Ty.
you were wondering why the FDIC will have a time taking over Citi? Besides, of course, the issue of its sheer size?
Like maybe Citi’s CEO coming out and trumpeting to the employees just how strong it is?
That’s right: Citi is more profitable this quarter (so far) than in any quarter since 3Q2007.
Here’s the memo in its entirety. The money quote:
I was thinking about this and other issues while out walking the dog this morning. The late-night/early-morning news was all (on all networks) about how Obama’s doing too much, if the banks and carmakers are dying let them die, cut ‘em all off and kill ‘em, let all hell break loose. This is all coming from the same Republican idiots we hear from all the time. All doom and gloom all the time.
And, it got me to thinking.
Why all the fearmongering?
By the time I got to one of the more scenic overlooks on my dogwalk (the wonder setter and I did 4.5 miles this morning, fast, for those of you interested) I’d come to the conclusion that the reason was that this was more of the same REpublican propaganda we’ve seen for years now.
All the Democrats are giggling at RNC chair Michael Steele and watching the “implosion” of the Republicans as the visage of Rush Limbaugh rises like Vladimir Putin’s head leering and peering across the Bering Straits at Sarah Palin’s back porch. (You remember the image.)
But, I predicted that the dominant theme the Republicans would use once Obama won the election would be that
In that regard, the ongoing collapse of Steele as RNC chair illustrates the Republican propaganda perfectly. He was purely a token hire who got the job because no one else “wanted” it and is now taking one for the team. He’ll be exposed as corrupt and a crony-monster. And all America will see that black face going off in disgrace, scandal and mismanagement.
Then there is the Burris saga. It will come back. The propaganda will kick up along those same lines once the Sagamon County prosecutor gets around to indicting him for perjury before the Illinois Legislature’s impeachment committee. That will take a while – the prosecutor and Fitz are going to have to work out an arrangement for the tapes to be copied off and provided for the county’s investigation. Then, Burris, in Blago-like fashion, will fight in a fabulously, spectacularly and desperately inept fashion against an open-and-shut case, getting all sorts of really negative press.
Once again reaffirming:
All the while, the TradMed, owned by Republicans, will have adopted a two-pronged approach to creating the news:
Prong 1. Fear and more fear.
Prong 2. Instant gratification thwarted by ineptitude and “trying to do too much”.
We’ve all seen – and Rove and the other Rethug propagandists know quite well – how effective constantly replaying images of jetliners crashing into tall buildings was in driving a populace like a herd of scared sheep into all sorts of unnatural things. The fear of some dark-skinned people taking over your plane and killing you in the process is nothing next to the slow grinding fear of being made homeless, penniless and jobless.
We will see story after story about fear, calculated to raise fear and inspire it.
As to prong 2, we will see a constant drumbeat of inanity demanding that the misfeasances and worse that took an entire generation, be resolved in time for news at 11 so we can all go back to the way we used to be.
News flash: we are not going back to the way we used to be. It never was the case with anything that you ever went back to the way you used to be. that is the nature of life, and the one thing that the US consumer society’s advertising tries so desperately to hide from the consumers themselves.
I suppose the one conclusion we can draw from McSame’s growling is that he and his economics puppeteer Gramm have managed to get their money out, and the Boys in charge of the Rethug party have managed to get their money out and even get into a position which will profit from the collapse they are cheering for.
Which is why they are cheering for it.
Watching this for the third time…yowser
“our economy is being nationalized faster than you can say Hugo Chavez”
It’s not being nationalized, it’s being rescued.
Boxturtle (Please don’t ask me to explain the difference)
Sheila Bair “GOING FORWARD WE NEED TO REVIEW THE SIZE OF THESE INSTITUTIONS”
OT: Forward spoofs Rahm as advice columnist. Posted in the slight chance of getting a laugh from anyone here.
Thanks, bmaz, it’s great to be back at the Greatest Blog in the Universe! It’s truly an honor to share view-points with emptywheel, you and all the FDL Community!
I was away at a two week retreat, followed by somehow ingesting a can of bronchial whoop-ass that layed me up for about a week. I’m around until the 20th, when I’ll be off-line for a few months.
I’m hearing from lots of people about Obama – Where’s the beef? The whole nation is lined-up to follow his lead, but he appears to be too busy asking permission from Rush and the Goopers to get anything going – eerily similar to how he almost fell off the tracks during the campaign by falling for Palin’s low-level poking and sliming. He needed to ’snap-out’ of Palin-fixation then, and, imvho, he needs to do it again now with Republican Obstructionism.
All this at a time when We need to be doing National Aerobatics to pull-out of an impending Blue Max moment – letting an aircraft ‘run out’ and gather downhill speed – instead of taking advantage of relatively slow speeds to deftly maneuver – usually leads to the wings tearing off when the maneuver is belatedly attempted.
My fear is that the Goopers will obstruct any “visible signs of Obama-success to the Public” – limiting his maneuver space – and let him ‘run out’ for another 50 days – and then, imvho, we can stamp his/Our Blue Max certificate and simply wait for the sound of the crash.
Can you imagine the hail of blistering criticism any of us, let alone a Rush Limbaugh-like Party Leader, would have received from the Republicans if we had said of George Bush in 2001: “I want him to fail”?
infoganda