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Pam and Russ Martens: Doomsday machine returns with Citibank's credit default swaps
By Pam and Russ Martens
Wall Street on Parade
Friday, January 3, 2020
Lily Tomlin is credited with the quote: "No matter how cynical you get, it is impossible to keep up." Wall Street regularly brings that message home.
According to the latest derivatives report from the Office of the Comptroller of the Currency (OCC), Citibank, the federally-insured, taxpayer-backstopped bank owned by Citigroup, has sold protection to other banks, hedge funds, insurance companies or corporations on a staggering $858 billion of credit default swaps. When a federally-insured bank sells protection to others on credit default swaps, it is effectively taking on the risk of a default event. At a time of unprecedented levels of debt in the system and growing warnings about leveraged loans, that seems like a very unwise move by Citigroup.
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Northstar Gold Closes Initial Public Offering
and Lists on Canadian Securities Exchange
Wednesday, December 31, 2019
NEW LISKEARD, Ontario, Canada -- Northstar Gold Corp. (CSE: NSG) announces that it has completed its initial public offering of 9,985,498 common shares at the price of C$0.30 per common share for gross proceeds of C$2,995,649. The corporation will be listed as a natural resource company on the Canadian Securities Exchange (CSE) and the common shares are expected to commence trading on January 2, 2020 under the trading symbol NSG.
Haywood Securities Inc. and Canaccord Genuity Corp. acted as co-lead agents and joint bookrunners under the offering. For their services, the co-lead agents received a cash commission equal to 10% of the gross proceeds of the offering and 998,549 common shares reserved for issuance upon exercise of the common share purchase warrants granted to the co-lead agents upon completion of the offering. The agents' warrants are exercisable at a price of $0.30 per common share within two years.
The corporation intends to use the net proceeds from the offering to complete Phase I of the work program recommended in the technical report dated December 10, 2018, entitled "Independent Technical Report on the Miller Gold Project, Kirkland Lake, Ontario." ...
... For the remainder of the announcement:
The OCC notes that Citibank has bought protection via a larger amount of credit default swaps -- a total of $898.8 billion. (See Table 12 in the appendix of the report.) There is no guarantee, however, that these bets are properly aligned and will not, once again, blow up this bank along with a chunk of Wall Street firms or insurance companies that may be its counterparties.
Credit default swaps played a central role in the 2008 financial collapse on Wall Street, as did Citigroup. It is an indictment of every federal banking regulator in the United States, as well as Congress, that Citigroup has been allowed to return as a major player in this market while using its federally-insured Citibank once again as a pawn in this game. ...
... For the remainder of the report:
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