Monday, September 29, 2008

Companies to Large to Fail, Becoming Larger. HELP!

If the problem with bailing out corporate bankruptcies centers on the idea they’re too large to fail, why are we letting these same banks get larger?

CNN: Citigroup Inc. agreed to acquire Wachovia Corp.'s banking operations on Monday. The Federal Reserve and Treasury Department were also part of the effort, another sign of how proactive the government has been in preventing ailing financial firms from failing and instead pushing for stronger firms to acquire some assets of the weaker companies.
It’s good to see a responsible bank like Citigroup helping out another troubled competitor…

Over the past year, Citigroup has racked up more than $40 billion in write- downs and other losses stemming from the mortgage meltdown. The company was a leader in creating and marketing some of the exotic securities that have been at the heart of the credit crunch.

Huh! Has it occurred to anyone else that the consolidation we’re seeing on Wall Street is actually re-creating even larger companies that the government considers “too large to fail?”

Down the rabbit hole…

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