The Wall Street Journal is out with an opinion piece that, for the most part, I support. I don’t agree with everything in the piece, but I agree with a lot of it. The piece delves into Citigroup’s recent support of cramdown legislation. If someone sees a story out there, that takes the opposite view of the Journal piece, please send it my way. I’d like to present both sides of the story. From the Journal:Mr. Durbin and his allies have tried and failed several times to break the cramdown opposition, and they believe Citi finally gives them the club to prevail. As Mr. Schumer noted in a press release, “Citigroup’s support means that the dam has broken across the banking industry. We now have a real chance to pass this legislation quickly.” Talking point number one for Democrats is that if giant Citigroup is for this plan, why would anyone oppose it?In fact, Citigroup may support this plan precisely because it isn’t a big player in the mortgage market. Sure, it has some dodgy mortgage-backed securities on its books, but they’ve been written down and the feds cover 90% of losses beyond $29 billion in any case. When it comes to making loans, however, Citi originates less than 10% of American mortgages.Citi is falling further behind J.P. Morgan Chase, which acquired Washington Mutual; Wells Fargo, which acquired Wachovia; and Bank of America, which bought Countrywide. J.P. Morgan’s mortgage business is now twice the size of Citi’s, while Wells and BofA each originate almost three times as much dollar volume as Citi. So in agreeing to Mr. Durbin’s offer, Citi is also volunteering its competitors to write down more mortgages, giving Citi a comparative advantage.You know, I don’t trust anything Citigroup does. All of our BS meters should have been spinning when Citigroup did an about face — and threw its support behind this legislation. You can read the rest of the story here (link).Related Articles:Citigroup, Senators in Talks to Let Judges Modify Mortgages
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