Despite the fact that the proposed financial-reform bill contains a rule barring big banks from investing clients’ money in private equity and hedge funds, Citigroup has declared its intention to raise $3 billion earmarked for Citi Capital Advisors, which oversees its, guess what, investments in private equity and hedge funds. And why not? Let’s look at the facts: First of all, the banking industry has people working round the clock on diluting the so-called “Volcker Rule,” or banishing it entirely. And even if the Senate version of the bill, which contains said rule, does pass, it contains a provision subjecting the rule to a two-year study, during which time it will likely be even more watered down, and no one will even notice because by that time we’ll be even more sick of talking about this than we are now, and excited about whatever new bubble we’re in. (And let’s face it, will Paul Volcker even be around to protest? He is 83!)
And then whatever bastard version of the rule ekes through, assuming any of it does, will take at least six years to implement. So whatevs! In the meantime, Citi is going to carpe the diem and make
themselves their clients some money.
“Regardless of the ultimate outcome of financial reform, our priority will always be protecting the interests of our clients, who have selected us to be the fiduciary manager of their assets, and ensuring the soundness of the CCA platform moving forward,” spokeswoman Danielle Romero-Apsilos said.
Yeah, they’re just going to take their chances. And ours. Because if it all goes wrong, well, then, the government was dumb enough to bail them out the last time, so they’ll probably do it again, right?
Citigroup Looking Past Volcker May Seek $3 Billion for Funds [Bloomberg]
“Volcker rule” at issue as reform bill nears finale [Reuters]