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January 15, 2015 By Richard Bowen

Is Citi the next AIG… ?

Is Citi the next AIG… ?
Source: Wikimedia, Credit: ZebraDS

An interesting and disturbing piece of news just came across my radar.

The Office of the Currency Comptroller’s most recent report of the total amount of derivatives held at the Big 4 banks shows that Citibank has surpassed JP Morgan, Goldman Sachs and Bank of America with $70 trillion in holdings, making it the single biggest holder of derivatives in the U.S. Looks like in this third quarter, the part of Citi with deposits insured by FDIC,  went on a derivatives shopping binge, purchasing over $9 trillion in notional amount of derivatives!!

Isn’t it curious that Citibank is increasing its total derivative holdings as other banks are derisking their balance sheet?  Is it just coincidence that it was Citigroup who just wrote the provision included in the year end omnibus funding bill that repealed the Dodd-Frank prohibition against funding risky derivatives with FDIC-insured deposits?  And has anyone else noticed that this, once again, surely puts taxpayers on the hook for even greater FDIC bailouts if the derivatives go south?

Some folks are asking if Citi is the next AIG, which became the world’s biggest derivatives player just before that market to blow blew up in 2008. Have we forgotten that if AIG had not been bailed out $180 billion of taxpayer money they would have taken down many of the banks that are too big to fail, and perhaps the rest of most of the  global financial system!

We need to ask- why is Citi adding to its derivatives exposure? Coincidence or deliberate strategy? Is there more to the recent law change pushed through by Citi which now allows it more freedom to take even greater risks with our money?

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Richard Bowen is widely known as the Citigroup whistleblower. As Business Chief Underwriter for Citigroup during the housing bubble financial crisis meltdown, he repeatedly warned Citi executive management and the board about fraudulent behavior within the organization. The company certified poor mortgages as quality mortgages and sold them to Fannie Mae, Freddie Mac and other investors.

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"Richard Bowen has been there, done that, and has the scars to prove it, and his message of corruption at the highest levels of industry and government needs to be heard. I only wish that more bankers had the courage that Bowen exhibits. He is not only one of the most talented bankers I have ever met, he has more integrity than all the bankers on Wall Street put together. If his former employer had listened to him taxpayers would not have had to bail out Citi for the third time in the last 30 years." ~ Dennis McCuistion, Host of the McCuistion TV program
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Presentation Topics

Playing for High Stakes: The Principles and Practice of Ethical Leadership

Dark Citi: The Story of a Whistleblower

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Now an ethical leadership speaker, Richard Bowen was Citigroup's Business Chief Underwriter during the housing bubble.

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