By Michael Gray
Now that the nationalization plan for Citigroup has begun, I believe I have more clarity it what the end game looks like.
With yesterday’s good bank/bad bank announcement CEO Vikram Pandit put Fed chief Ben Bernanke’s plan into effect. Not sure if the feds have the guts to pull this off on a Sunday under the guise of systemic risk or play it out over a longer course, but here are the winners:
• Goldman Sachs gets Global Consumer Group, which includes the Citibank deposits and the branches.
• Warren Buffett will take the Primerica unit
• Morgan Stanley gets the remaining 49% stake in Smith Barney as well as the Global Wealth Management unit.
• The Mexican government will re-nationalize Banamex.
Pandit has been working with federal banking oversight staff for three months now. The feds already know Citi is a zombie company.
After Citi is unwound of all its assets Uncle Sam will place the toxic portion of the balance sheet in the Yucca Mountains next to its spent Uranium rods, for fear of taking down JPMorgan, and other banks by pricing the derivative paper.
Goldman is a bank holding company with a commodity broker at its helm. That makes no sense to me. That’s why I said Gerald Corrigan, the former NY Federal Reserve president and current chairman of GS Bank USA, would be named chairman in my year in review. http://mgray12.wordpress.com/2009/01/03/2009econ. You will also read about the Citi nationalization plan and plenty more.