I didn’t know this bit of Citibank history:
But I will say that if the recent history of our financial system tells us anything, it’s that it’s a miracle (and not in the good sense) that at least one bank—Citigroup—hasn’t already been taken over. This is a bank that was, by most accounts, technically insolvent in the early nineteen-eighties, as a result of the Latin American debt crisis. It was in serious trouble again in the early nineteen-nineties—Congressman John Dingell actually gave a speech in 1991 saying it was insolvent. And it’s been a major player in, and cause of, our current financial crisis, with a chorus of analysts declaring that, once again, its liabilities are greater than its assets. It does make you wonder how many lives it has, and it also makes you wonder why, after its earlier woes, regulators ever allowed it to get this big.
It seems to me that encouraging the growth of ever-larger financial institutions has actually been part of the regulatory strategy for avoiding ever needing to do something like seize Citigroup. When a bank’s in big trouble, one way to resolve the trouble is to fold it into something bigger. But now Citi’s gotten so big that only the federal government is big enough to provide a workable fix.