Not content to just fritter away OUR $20 billion on stadium naming rights or equally outrageous billion dollar executive bonuses, Citigroup is now plunging headfirst into the newly "emerging" market of credit RECOVERY swaps. Bloomberg News reports that Citigroup, one of the primary peddlers of the now infamous credit default swaps, is one of several banks selling "wagers on the amount investors may recover from bonds after borrowers go bankrupt."
How obscene is this?
"The market definitely has potential to grow," Foux (a Citigroup strategist) said. "As we see more defaults -- and there’s no doubt we’re going to see more defaults -- you’re going to see more recovery swaps trading."
Once again, this is stuff that's all done in secret -- they're not traded on any exchange, nor are they subject to any of those pesky rules, regulations, or reserve requirements, etc.
"There has not yet been member demand for us to track recovery swaps"
-- this from a spokeswoman for the International Swaps and Derivatives Association.
Devilstower has an excellent article that explains credit default swaps (CDS) in all their Ponzi-scheming glory. Do you think NOW we can get Congress to get off its butt and stop with the Strongly Worded Letters™ and finally start investigating these guys? I don't know, maybe for misappropriation of funds, or for what sure is beginning to look like major misrepresentation of their true financial state (what used to be known as fraud). How is it that we're paying for yet another gambling adventure, where the only guaranteed winners are the house (ie, Citigroup and the other vulture banks) and the only guaranteed losers are we, the taxpayers?