April Fool’s Day Comes Early: Citi Bets on Next Financial Crisis

DATE: February 12, 2010

April Fool’s Day Comes Early: Citi Bets on Next Financial Crisis

Washington, DC – Americans for Financial Reform points out Wall Street “innovation” at its finest: This week Citi announced plans to create “the first derivatives intended to pay out in the event of a financial crisis.” Clearly the captains of greed have returned to business as usual.

Heather Booth, Executive Director, Americans for Financial Reform: “The Onion probably wishes it had written this story. Unfortunately it’s no joke. Even Citi is convinced too little has been done to avoid the next financial crisis – in fact, so strongly do they feel a repeat is possible, they are offering financial products to gain from the next collapse! With this scheme, they can bet there either will be or will not be a collapse – to which they contribute. The notion that Citi would look to make money off another collapse is inexcusable, irrational and blatantly irresponsible.”

Lisa Lindsley, Deputy Director, Capital Stewardship, United Food and Commercial Workers International Union: “Greedy, reckless behavior from big banks and abusive practices by credit card companies and mortgage lenders created this economic mess and left Main Street and millions of unemployed workers to pay the price. Citi is using taxpayer money to recreate the house of cards that brought down AIG – selling unregulated insurance called ‘derivatives.’  To add insult to injury to the working people who bailed them out, Citi is acting as the bookie for folks looking to bet on another financial collapse.

“Now is the time to take action to prevent another crisis. Financial reform will hold Wall Street accountable and protect consumers while increasing stability for small businesses. We need to stop big banks like Citi dead in their tracks before they cause another crisis from which they can profit.”