Even Bigger Than Too Big to Fail

Editorial from The New York Times

Asserting that it “is among the strongest banks in the industry,” Citigroup announced on Monday that it would soon repay $20 billion of federal bailout money. This from a bank that has been in the red for most of the past two years, that is expected to limp through 2010 amid a torrent of loan losses, that saw its stock price close after the announcement at a measly $3.70 a share — and that, like other big banks, is still reluctant to lend.

Meanwhile, the Treasury Department, which seems to have no qualms about Citigroup’s self-proclaimed strength, plans to sell its $25 billion stake over the next six to 12 months.

Citigroup’s planned exit from the bailout — like Bank of America’s earlier this month — would be welcome if the banks were the picture of health. But their main motive is to get out from under the bailout’s pay caps and other restraints. The Treasury Department’s approval is a grim reminder of the political power of the banks, even as the economy they did so much to damage continues to struggle. more

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