Letting Citi Go

Citigroup is said to be near agreement to free itself of executive pay caps, within 24 hours of the President bashing Big Finance on network TV.

By Bloomberg's estimate, Citi is said to have a market value of about $90 Billion.

Since the Federal Government bailed out the company, which almost certainly would have gone bust in the panic a year ago making the common stock worthless, shouldn't the Feds have structured this so that the taxpayer reaps at a minimum 50% of that $90 Billion, and reaps it now?

And what about all the bondholders of the holding company? They have been receiving interest payments for years (depending on the vintage of the bonds). Why was there no haircut for them, as well?

All this is happening as the over $1 Trillion spending bill heads soon to the White House for signature. It is being widely reported that discretionary spending is rising 10-12% overall year on year. All this is under the PR guise of helping the economy . . . except that there's no funding for this extra spending. So much for the idea that the criticisms one Party makes of the other when out of power mean anything when power shifts from the outs to the ins.

So far as the economy goes, there appears to be a general comfort level that uneven better times lie ahead.

The major fly in the ointment, it seems here, is that asset prices have been propped up too high and that small business is objectively in the toilet. Multinationals and other large companies with political influence and good access to capital may prosper and keep the stock averages up, but the bailing out of Big Finance has not led to any trickling down of its alleged prosperity to the average person.

It is no wonder that as of yesterday, Rasmussen Reports had the President sinking to his lowest ratings ever. People get it. They get that the bailout went to Big Finance, Big Labor, et al. Thus they likely understand that the bashing of Big Finance by the President yesterday was for show, and that the reality was that Citi is now going to be free to pay its executives as much as it wants so that they can screw up on a grand scale for the umpteenth time.

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