For close observers of the size of the backing that governments and central banks gave to banks and investment banks during the 2007-08 financial crisis, Bloomberg Magazine has a fascinating breakdown of the figures.
As I noted in my column last week on Hank Greenberg, the former head of American International Group, the liquidity support offered to financial institutions by the Federal Reserve – including use of the discount window – is enormously valuable.
Watching Chuck Prince and Robert Rubin, the former Citigroup chairmen, giving evidence today on the bank’s losses in “super-senior” sub-prime mortgage securities, was not reassuring for anyone seeking lessons from the 2008 financial crisis.
In summary, they told the Financial Crisis Inquiry Commission in Washington that the risk management and management structures at Citigroup were state-of-the-art, that regulators were keeping a close eye on the business, and that the board was functioning correctly.
The problem was that no-one actually saw a hole looming in the $40bn portfolio of triple-A tranche collateralised debt obligations being held on Citi’s balance sheet.