The New York Mets have announced that their new stadium will still be called Citi Field. According to news reports, Citigroup will pay the Mets a trifling $400 million over 20 years for the naming rights to the new ballpark. Small change. The Mets added that the government bailout of Citigroup will help the bank survive the “economic crisis.”
Citibank, we were told, was “too big to fail.” Thus the federal government, in the person of Wall Street icon Henry Paulson, agreed on Nov. 23 to protect $306 billion of Citigroup’s loans and securities against losses.
The Bush administration and its Wall Street minions continue on their way of injecting more federal money to save banks from themselves and heal their self-inflicted wounds. The purpose, Treasury Secretary Paulson contended, was to free up frozen credit markets. But after running up a tab of more than $4 trillion, the credit markets remain mostly frozen. The Financial Times reported in January that Citigroup had raised $14 billion from foreign nations and public investors to shore up its bad debts. The Chinese bought up $9 billion. And no alarm bells rang in Washington or on Wall Street.
Meanwhile, Paulson seems oblivious — or is it unconcerned? — with the future of American automobile workers, who have seen their jobs shrivel because of more bad management. Maybe Paulson believes the current urban legend that auto workers make $70,000 a year, plus all that luxuriant medical care and those lucrative pensions. No need for a bailout of their companies. Meanwhile, the UAW is trying to help, offering contract changes to prevent the Big Three from collapsing. Those concessions include suspending the jobs bank, which requires employers to pay some laid-off employees, and allowing the carmakers to delay payments to the new retiree health fund.
It is staggering when one thinks of what Paulson and the administration have delivered to the financial community in the past few weeks. The 2008 bank bailout tab so far is more than $4.6 trillion, which is more than the total expenditures (in current dollars) for the Marshall Plan, the Louisiana Purchase, the S&L failures of the 1980s, the New Deal, the Korean War, the Vietnam War, the Iraq war, the moon landing, and all NASA budgets combined. There you have it: Republican small government redefined.
What blatant hypocrisy Citigroup and the Mets peddle. The government has helped out banks because of the “economic crisis”? Why can’t the government (and the Mets) get it straight? Better yet, why can’t our vaunted “free” media state the fundamental truth? Our so-called economic crisis isn’t a freak event, but the result of the excesses of the financial “industry” — as if it produces anything. We once called bankers “prudent.” Now they are best known for their acquisition and the making of mindless bad debts.
Why doesn’t the government fault Citigroup and similarly situated fellow bankers for their total irresponsibility in accumulating their bad debts? Why doesn’t Henry Paulson offer a plan to prevent such malpractice again? He might start by recommending restoration of the Glass-Steagall Act, repealed in 1999 with the sage sponsorship of Phil Gramm, Robert Rubin and Alan Greenspan. That’s the kind of “bipartisanship” the business community loves. Glass-Steagall, for nearly 70 years, prevented banks from much of the activity that resulted in our present problem. The proponents of the repeal undoubtedly will defend themselves with the “free market” nonsense they have peddled so successfully for the past generation.
Meantime, the game must go on, and there is money to reap. Let us be happy knowing that the financial meltdown has not threatened the Amazin’ Mets. And perhaps they’ll manage to snag an overpriced free agent during the off-season. The game must go on — and the owners have to make money.
Stanley Kutler is the author of “Privilege and Creative Destruction,” among other writings.