Syre- 11-24

Steve's site. I have been I how I almost called you twenty times over the weekend is so much of this financial and market news and you've got to help me figure out. Citicorp. It must city group however -- replica college these days -- they'd make a big run at a bank recently to a I rupiah yeah we're clearly not one page can you imagine an athlete BS now pulled it. -- A -- thicket that all weekend long I mean they came within a wind Spirit they ended up -- to court initially to challenge the decision you know that I.

Colby who was failing fast Citigroup's swapped and they had to deal with them. And then at the last minute investment deal by the way that was supported by the FDIC they had all and that's. And then at the last minute Wells -- out on the west coast swooped in with a better deal. And I ended up taking it away from them and as you point out Citigroup went to court and so on them and said we're getting screwed and but eventually they walked away empty handed in debt and thank god for that --

Yes so so tell me how it could have been that they came so close and could again with the with the assistance or encouragement. As you say the FDIC and a whole series of other dynamics behind the scenes and now. They've been in but really at a -- apparently nonstop. Ian tense negotiations and discussions with Paulson Bernanke so and so forth. Because they sound as if their remained completely impoverished.

Well there's certainly got a a bunch of assets that have a lot of problems and they own just. Piles and piles of this stuff that we've been talking about before. A lot of -- the mortgage related securities but other kinds of of loans that also are troubled in varying degrees in you know they've been tried a lot of that around for a long time and tell everybody it was fine. Last week this stock was just in a nosedive and people were losing complete confidence in the -- you know confidences in a bank it. The single most important. I think that they that they have it's with -- trade on and once you lose confidence. You do the big trouble as a bank and although they've -- they were talking a good game all week by by the end of the week on Friday you know they were headed to Washington you know looking for some sort of dire finances to help prop them up again and they negotiated. Through the weekend and what we yet what we have now is basically what they agreed to by Friday night.

I hope anytime I go to the I opened it and they go to Washington looking for additional assistance they go by the phone while bus rather than by private and daddy and -- quite a little bit of you know PR work on a quick question before it justice open holly in warrant. Robert Rubin -- you know Clinton treasury secretaries so on and so forth. Has been sitting on the board of Citicorp for number of yet. How come nobody is asking. Who knew what when you know the old John -- question from Watergate what did you know. And win -- you know I mean I read that Robert Rubin's. Fingerprints are all all the the selections and and you know the new Treasury Secretary. Obviously Larry summits on and so forth and you have a melt down that securing. And he was on the boy and I act. There's something Steve I just don't understand this is one where writes that I've got to talk to Steve.

Absolutely yes. Well you know there are earlier in the that they were -- there are people were talking about. You know whether it is to get the latest bail out that you know that. Management -- city would end up getting -- but in in truth the guy running the company now. Replaced. Another guy trapped friends who had gotten fired and so. To some degree visit visit. On the top. New generation of management but. Bob Rubin does not fit that category he was there all along and absolutely -- I don't know the answer about so we're he was what was going on and you know there was just. Do there was historian at times over the weekend that was very interesting about so demand rushed into. Risk over recent years. By Citigroup. In terms of risky assets that they acquired built up the company weapon. You know to what degree that that institutionally that could happen without you know somebody on the board -- sophisticated Bob Rubin. Not seeing what was going on in not doing something about it is is good question. I would do -- in pursuing that I don't know the answer --

go -- Steve how much is this is that caused by the that the gatlin devaluation of their stock I mean they they were at thirty they're now trading at three dollars and 77 cents in. And we do recommend to by the stock actually.

aha I popped up I liked his direct questioning. And let it is very good.

I I don't have an opinion on the star -- had -- Certainly this is huge -- work for the companies are coming out with a plan that guarantees or or props up all kinds of assets inside it. More of a real price too but certainly a deal that is a sweetheart deal by -- any -- imagination. But you know -- the stock goes from here. I I don't know in terms of how much of cities problem woods. Was in fact the -- The following stock last week I think. There's an element of that but I think the falling stock was a symptom of the problem that was really eating at city and again I go back to that confidence issue debt. When you're in the market borrowing and lending money all the time. That confidence in the institution is is Paramount and the falling stock was a reflection of the declining confidence city.

Steve this Warren it Citigroup. As you know his -- two trillion in assets and 800 billion yen in deposits and -- did not going to go away overnight hopefully and and god knows that it would significantly impair the economy. But they're looking at laying off 52000. Jobs. The largest.

Yeah a direct and out that a week two.

Unbelievable. The universal I want to go back to Tom's question which is invoked Robert Rubin's role here as a directory CD group. And with that you know all his proteges Tim Gardner -- Treasury Secretary yeah. Peter world -- or Skaggs the is going to be the budget director. And obviously Somers these guys are all Ruben guys they all -- very close and not traditional tangent to -- these guys all served under Rubin. Rubin's policy duties not projected to come back -- seven years old now one you know I'm sure he's done very well financially Republican go back to DC. And that's have a right agent James Rubin. They and they always a lot of them went to two Citigroup with him and had different roles with him Michael from -- his chief of staff. You so much Mike question I guess interest to go back. -- this pose a real problem for the the tighten links between. That the Citigroup gang if you will the -- gain and the people that are hopefully going to be tapped for Barack Obama's administration to get us out of this mass. Well I think you'll look at the you know it's sort of -- a Democrat -- but that he does cause me pause here.

It's that is definitely an issue. There's an editorial in The Wall Street Journal this morning insert. Described the job. Secretary treasury in the short term as secretary of bail outs and and that's tiger it's perhaps that's not you. Yes. Good credentials for that in the short term and that is -- as he's been working -- in New York said recently served but orchestrating bail out has been not. Job number one and so I think and to some degree as good credentials to that but if this -- credential which was goals for many many years I think. It -- the -- debacle has really are Rubin and India and I'd go back to Tom's original question don't exactly. You know how much did -- know or should have known and should you know you -- his -- or done something about it instead of you know clearly. If you're not doing anything were being completely ineffective about it one where else.

And what we talked volley point -- the stocks decreases as well Thirtysomething gaullist flashier and out of three dollars and 88% decline in twelve months but that's a disaster by any state ended and ensured only Robert Rubin as a director has that beer some accountability and I'm not sure. He's the guy that we need to get us out of this mess sense with Citigroup ready when she potentially helped put a mineral.

Bright -- well I mean you know that this stock prices reflected you know a huge damage to the company and beyond the actual stock price and take. Particular point there but you know the institution itself has been as just you know take a rocket over the last couple years and then. For that I believe it all directors have their responsibility including pop group an absolute.

Yes you know this in a sense that I have is that not just yet confront the city's Citigroup. That is the kind of dismissive attitude to risk offices that I think probably would have been asking the cautionary questions I assume somebody asked cautionary questions. While during the course of these you know bubbles and derivatives and leveraging and elect. And apparently you know the greed of the design of -- bonuses and and you know what I call fully appreciation based upon ridiculous instances it is not. -- last question -- ago. You described it as as sweet a deal when you responded to Holly's. It's. Question about the Bob you know the value of the stock would you buy it. I read in the paper that the government is going to take a preferred position. I get 8% to that existing shareholders cannot get a penny of dividends without approval of the government so if any of us the city shareholders were put on the sideline. -- 8% today I assume when you say -- deal that this TR arises a Swede -- deal for writes for the government that we are.

I think it's a decent deal where where it assuming a lot of risk here along -- way and you know has basically it is all large amount of assets that. That are being protected through this deal and that. If they're value declines Citigroup pastors. You don't -- the lost out to some limited degree and then we're on the books sell so we do get something with the a good yield but we're taking. A real risk for that -- it when -- face sweetheart deal what I really meant was as Citigroup was in trouble and somebody had to step up in April was not. There was nobody else does he can show the opposite sweetheart deal that you know -- the rest of the market is looking at this and saying now so. You know if there was a market alternative than some would have happened already and -- as we go into the next year is going to be a lot of talk about. Kind of reforming regulation. And and shadow banking and investment banks in and how the government oversees these things and it you know when you look at Citibank last samurai looks -- with the bank that is regulated. That is right in the central all the integrated city as a huge investment banking operation in all kinds of other things. But at its core it's that it's. A federally insured federally regulated bank. That you know -- run off the rails by miles and I think you have to ask yourself how. -- regulation allowed Google regulators. Sort of allowed this. Kind of situation to work to develop to become so severe.