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Is Citigroup too Big to Fail?

January 18, 2009

By MoneyRates Team | Money Rates Columnist

The latest news from Citigroup Inc. is their deal with Morgan Stanley which combines their brokerage business which runs under the Smith Barney name and the wealth management business operated by Morgan Stanley. The deal brings Citi some much-needed cash, but won't let them escape from their sub-prime nightmare. Already as a recipient of TARP dollars Citigroup is in partnership with the government, but the overwhelming losses and writeoffs that the bank has absorbed has raised the issue of the FDIC forcing a closure. However despite the mega-losses many banking experts believe Citigroup is considered to big to fail by the financial sector and government regulators.Former FDIC-Chairman, Donald Powell, voiced his opinion in a recent interview on Bloomberg TV:

Powell seems convinced the answer is YES that Citigroup is too big to fail. So despite the 95% loss in stock value of one of the nation's largest banks, Citigroup may live to see a turnaround.

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