Citygroup Roulette

So, Citigroup is being allowed to pay back its TARP money minus billions of taxes they should pay, but also:

Bank regulators including the FDIC and Federal Reserve want to permit a phase-in of capital requirements that rise starting next month under a change approved by the Financial Accounting Standards Board. The rule, passed in May, eliminates some off- balance-sheet trusts, forcing banks to put billions of dollars of assets and liabilities on their books.

If they don’t have enough money to recognize their liabilities, why are they being allowed to pay back their TARP money?  (Bear in mind, that it is certain that they have many more liabilities than just these.  They are only being forced to recongize some of their liabilities.)

Well:

• TARP needs to be seen to make a profit
• TARP is going to be used by the President for further stimulus.  With 40% of Democrats saying they’re going to stay home in 2010, Obama needs a money Congress can’t deny him.  The banks give the money back to TARP, and Obama can use it as a slush fund.
• With TARP repaid Citi can pay better bonuses, avoid reorganization and are out from under the government’s thumb.

Citigroup is almost certainly bankrupt, if it were actually forced to bring everything back on balance sheet and value assets at market prices.  But hey, job #1 in America is making sure Bankers never face any responsibility for destroying millions of lives while paying themselves billions.

And Job #1 is being taken care of.