Over the last few days in the wake of the Greek financial crisis, a great deal of confusion and misinformation has been injected into the public forum.
One of the most starling pieces of misinformation I have come around is this post shared by the Facebook page ‘Yes Clydesdale’.
Not only are the figures quoted in relation to these corporate bailouts
incorrect, their absurdity reaches ludicrous heights. Unfortunately many people believe them. This kind of misinformation only serves to obscure the real financial and economic issues, and makes their resolution much harder to achieve. But, perhaps that is their intention?
The actual figures on corporate bailout can be found here.
In the case of Citigroup, as the ‘bailout tracker’ states:
“Citigroup was among the eight large U.S. banks to receive the Treasury Department’s initial round of capital investments — money described by Treasury officials not as a bailout, but rather as funds to help bolster “healthy” banks in tough times. But in November of 2008, with its stock price spiraling downward, Citigroup received additional government aid.
That $50 billion in aid came mostly in the form of large capital investments, but also through government guarantees to limit losses from a $301 billion pool of toxic assets. Treasury made those guarantees alongside the Fed and FDIC. In addition to the Treasury’s $5 billion commitment, the FDIC committed $10 billion and the Federal Reserve up to about $220 billion.”
To cut a long story short, the Federal Government provided Citigroup $45 billion in aid (not the absurd amount of $2.5 trillion). By December 2009, Citigroup had repaid $20 billion to the government. In December 2010, the U.S. Treasury converted the remaining $25 billion debt into Citigroup stock. With all government aid given to Citigroup now paid back, the Federal Government has come away with an additional $13.4 billion revenue for its effort.
These figures contradict the hysterical narrative we keep hearing about governments bailing out greedy bankers. At least in the case of Citigroup, and I presume with many others, the United Stated Federal government has come away, only a few years later with a considerable financial win.
As for the ludicrous figures quoted by the ‘Yes Clydesdale’ meme, Citigroup’s market capitialisation stands at $160 billion. It is a large company. The value of the company is nowhere near its supposed government bail out of $2.5 trillion dollars. As a further way of comparison, the total United States Federal Debt stands at $16 trillion.
It is absolutely nonsensical to even consider that the United States would have the capacity to bailout not only one, but several companies to the tune of trillions of dollars when it has the burden of its own debts and welfare entitlements. The reality is that banks and businesses are simply not that big compared to the behemoth of the United States Federal Government and other states.
Rather than suppress misleading information such as this hysterical and ludicrous meme, this (and others) need to be brought out to the light and exposed for the lies that they are and the misinformation and anxiety they are intended to create and spread.