Stanton Champion

A while back, I made a mental list of the “next to goes” after the Bear Stearns failure.  The list included Lehman, AIG, WaMu, and Wachovia.  At the very end of that list was Citi.  I never thought any further about who would go after that because a failure at Citi would be a freaking disaster.

Well, here we are.  So here’s the deal: there are three big banks on Wall Street that dwarf all the others: JP Morgan, Bank of America, and Citigroup.  A failure at any one of those would be an economic catastrophe.  They each manage so much money, both American and international, that any kind of failure would end up costing the tax payers billions for insured deposits while absolutely killing off billions more in uninsured global capital.  And don’t fall for the FDIC is magically going to make it all better thinking: the FDIC insures American deposits up to $250 thousand.  If you have more, or you’re global, then you’re screwed.  If you think this only affects rich Saudi billionaires, consider the deposits belonging to businesses who need more than $250 thousand in working capital.

So my message to the government is this: fix Citi.  I don’t care what it takes or how much it costs.  If that means making its problems go away, then do it.  If that means helping it fail gracefully, then do that too.  I don’t care.  Just don’t make me have to think up another “next to go” list because the names on that would be truly frightening.

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