FDIC chairman Sheila Bair doesn't think so. Justin Fox looks at how much of Citigroup was a "domestic commercial bank that the FDIC could take over, and how much was multinational financial stuff outside the FDIC's jurisdiction." Read it all. It's a very important aspect of the debate that needs further exploration. Fox concludes:
Citigroup has liabilities of $1.797 trillion. The deposits that the FDIC has some responsibility for (up to $250,000 per depositor) add up to $241 billion. So we have this reasonably sensible system for winding down troubled banks, but when it comes to the most troubled big banking company in the country, said system only covers a fraction of the overall operation. Which leads to a couple of conclusions:
1. I get why the administration is so reluctant to take over Citi completely.
2. I don't get why we all (I'm including myself in this) thought it was okay to allow the creation and growth of gigantic financial companies for which we had absolutely no plan for winding down in case of trouble.
We want to hear what you think about this article. Submit a letter to the editor or write to firstname.lastname@example.org.