November 26th, 2008
02:17 PM ET

All fall down

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2008/images/11/26/art.citigroup.jpg]
Thomas L. Friedman
New York Times columnist

I spent Sunday afternoon brooding over a great piece of Times reporting by Eric Dash and Julie Creswell about Citigroup. Maybe brooding isn’t the right word. The front-page article, entitled “Citigroup Pays for a Rush to Risk,” actually left me totally disgusted.

Why? Because in searing detail it exposed — using Citigroup as Exhibit A — how some of our country’s best-paid bankers were overrated dopes who had no idea what they were selling, or greedy cynics who did know and turned a blind eye. But it wasn’t only the bankers. This financial meltdown involved a broad national breakdown in personal responsibility, government regulation and financial ethics.

So many people were in on it: People who had no business buying a home, with nothing down and nothing to pay for two years; people who had no business pushing such mortgages, but made fortunes doing so; people who had no business bundling those loans into securities and selling them to third parties, as if they were AAA bonds, but made fortunes doing so; people who had no business rating those loans as AAA, but made a fortunes doing so; and people who had no business buying those bonds and putting them on their balance sheets so they could earn a little better yield, but made fortunes doing so.

Citigroup was involved in, and made money from, almost every link in that chain. And the bank’s executives, including, sad to see, the former Treasury Secretary Robert Rubin, were clueless about the reckless financial instruments they were creating, or were so ensnared by the cronyism between the bank’s risk managers and risk takers (and so bought off by their bonuses) that they had no interest in stopping it.


Filed under: Citigroup • Economy • Finance • Raw Politics • Thomas Friedman
soundoff (2 Responses)
  1. earle,florida

    Dear Mr. Friedman, For all of us who are concerned, your column is enlightening, but there's one caveat," Someone is Killing the Messenger"? In times of instantaneous news,ie)TV,Computers, Blackberry's,Laptop's,I-Phones,etc.,the magnitude of the financial (situation) crisis isn't resonating/exciting enough of the general population. I would like to suggest that the NY Times take out a,"full editorial page" explaining in layman terms just (the old printing press always get's the public attention) how this sad situation evolved. PS. The repealing of the(FDIC)Glass/Segal Act, and Repealing the Law(emasculate) that insured the Banking Industry to stay out of the Insurance,Brokerage Business ,etc.preventing conflict of interest. (Unfortunately, India/Pakistan diversion doesn't help!)

    November 27, 2008 at 4:31 pm |
  2. michael, CA

    stop being disgusted and start doing something about it. part of the problem is too much whining and not enough doing. im sure u have connections...make something happen. organize an independent auditing firm and coordinate with the SEC with the backing of the proper authorities. trillions have been lost and many left homeless and still one person is yet to go to jail.

    sorry, was a bit too harsh there.

    November 26, 2008 at 9:36 pm |

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