RECENT POSTS
- Anthony Scaramucci: S&P 500 Stocks Still Cheap
- Your First Move For Friday February 10th
- Home Builder Optimism Up, Industry Expert Says
- Chart Patterns Suggest Pullback at Hand
- UPDATE: Massive Trend Just Getting Underway in Financial Services: Finerman
- Terranova: Beware Nuance Play On Apple Spike
- Mortgage Settlement Could Buoy BofA Most: Traders
- Mark Mahaney Talks Akamai, Groupon, Yahoo ...
FAST MONEY FEATURES
FAST MONEY POLLGet in the post game. Respond to our "Question of the Day" right now.
FULL SHOWSMissed an episode of Fast Money? Watch the latest show here.
HEDGE FUND TRADE OF THE WEEKWhich names are generating the most chatter across the hedge fund community this week?
CALL TO THE FLOOR | CEO EXTRACheck out our library of CEO interviews; conversations from TV as well as web exclusives.
TRADE SCHOOLGrab a pencil because school is in session and the Fast Money traders are teaching class.
FAST MONEY PODCASTS
Download Fast Money onto your MP3 Player.
FAST MONEY WIDGETGrab this all-in-one application and get recaps of the show sent right to your desktop or blog.
SHOP FOR FAST MONEY MERCHANDISEGet your game on with Fast Money gear.
FAST MONEY SLIDESHOWS!Check out our scrapbook. These "pix" are guaranteed winners.
NEWSLETTERSign up for our daily newsletter!
FAST MONEY MOBILE ALERTSGet advanced information about the next Fast Money.
Text Size 
Is a “Bad Bank” The Answer?
 |
As banks struggle to navigate the financial crisis, a late report from the WSJ suggests the feds may create a government bank that would buy up bad assets.
And earlier in the day Citigroup revealed that it is, in fact, splitting into two operating units -- going forward with its own version of a "good bank/bad bank" strategy.
Good Bank
Citigroup's core commercial, retail and investment banking worldwide -- the good bank -- will be reorganized as Citicorp and led by Citigroup Chief Executive Vikram Pandit.
Bad Bank
The other unit -- to be called Citi Holdings -- will include brokerage, retail asset management, consumer finance and a pool of risky assets. The bank is considering selling off Citi Holdings assets, or letting them mature.
The retail brokerage assets include its remaining stake in Smith Barney, and Nikko Cordial Securities, as well as Primerica Financial Services.
The bank said it was searching for someone to run Citi Holdings.
Critics of the bank, who argue it had become too big and complex to manage, have demanded a break-up for some time, although most envisioned Citigroup splitting into separately capitalized companies, instead of separate operating units consolidated onto the same balance sheet.
Bridge Banks
Will it work? Fast Money consulted former FDIC Chairman Bill Seidman who also had to deal with collapsing banks when he ran the FDIC during the S&L crisis.
He likes the general concept and reminded the gang that during his tenure at the FDIC he created bridge banks. In this case the feds seized banks that were insolvent and then, “as soon as possible sold it back to the private sector.”
However, if the government follows a similar strategy it won’t go well for anyone holding common stock. “If you create a bridge bank shareholders lose everything.”
Is there a trade here?
If the government sets up a bad bank it’s probably bullish for the market, says Tim Seymour. You could get long the S&P [SPY
Loading...
()
].
I would also get long crude oil [US@CL.1
Loading...
()
] and things that are massively deflated, adds Joe Terranova.
I think it will end poorly, counters Jeff Macke. So far it always has....
- Anthony Scaramucci: S&P 500 Stocks Still Cheap
- Home Builder Optimism Up, Industry Expert Says
- Chart Patterns Suggest Pullback at Hand
- UPDATE: Massive Trend Just Getting Underway in Financial Services: Finerman
- Terranova: Beware Nuance Play On Apple Spike
- Top Fashion Stocks for 2012
- Pros Bullish On Visa, Even After It Hits a New High
- Semantics Suggest Higher Bid Ahead for Illumina: Finerman
- Premium Commanded by Whole Foods Ridiculous, or Surprisingly Modest?
- Caesar’s IPO Might Not Be a Good Bet, Pros Say
______________________________________________________
Got something to to say? Send us an e-mail at and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment but not have it published on our website send your e-mail to .
Trader disclosure: On Jan 16, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (C), (BAC), (SDS), (TM), (MCD), (DIS), (MSFT); Seymour Owns (AAPL), (BAC), (EEM), (F), (COP); Finerman's Firm Owns (DSX), (MSFT), (COP); Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY), (USO), (VNO), (BBT), (COF);
Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO; Virtus Diversifier PHOLIO Owns (IGE), (DBC), (DBV)
Virtus Investment Partners Owns More Than 1% Of (ABD), (ARE), (BIG), (DLR), (EPR), (EXR), (IGE), (SLB), (MAC), (DBC), (DBV), (SKT), (UA), (CLB); Virtus Investment Partners Owns More Than 1% Of Seagate Tax Refund Rights; Virtus Investment Partners Owns More Than 1% Of Corporate Office Properties Trust SBI MD; Virtus Investment Partners Owns More Than 1% Of Goldman Sachs Financial Square Fund - Money Market Fund
Data is a real-time snapshot *Data is delayed at least 15 minutes
