January 8, 2009 – 7:30 pm

You know it’s bad when Citigroup allows mortgages to get crammed down it’s throat. In a desperate attempt to keep the ponzi stream open, Citi agreed to dine on court ordered mortgages, and they even pretended to like it.

Citigroup Inc., one of nine U.S. banks to get government aid, agreed to support legislation that would let bankruptcy judges cut mortgage rates for at-risk borrowers, three U.S. senators said today as financial industry lobbyists said the compromise was flawed.

Citigroup endorsed the bill after Senate Banking Committee Chairman Christopher Dodd, and Senators Charles Schumer of New York and Richard Durbin of Illinois, agreed to limit the legislation to existing mortgages, rather than future loans.

It might be flawed, but it’s definitely indicative. Citi is stooping to levels that even mortgage bankers won’t touch.

The Mortgage Bankers Association objected to the Citigroup agreement and said modifications are needed before the measure helps stem housing declines.“We remain opposed to bankruptcy cram-down legislation because of the destabilizing effect it will have on an already turbulent mortgage market,” said John Courson, president of the Mortgage Bankers Association, in an e-mailed statement.

Well, that’s quite a statement from an organization that helped create the “already turbulent mortgage market.” This statement is so absurd that it makes one wonder what John is really worried about. Perhaps he fears that Citi might wander off the reservation. So you can sleep soundly knowing that neither Congress, nor Citigroup, nor the Mortgage Bankers Association is trying to stem home foreclosures. They just want to bring the ponzi credit stream to a trickle. Witness:

“This legislation would represent an important step forward,” Citigroup Chief Executive Officer Vikram Pandit said in a letter to the Senate released by Durbin. “It will serve as an additional tool to the extensive home retention programs currently in place to help at-risk borrowers.”

Oh, my! Oh, no! I was sooo wrong! Vikram Pandit does care about humans at risk. He said so himself.

For the consumer, the Citigroup agreement may actually help stem the pace of foreclosures just as some consumer groups are saying, but make no mistake, the mortgage bankers are out for themselves. It’s just that Citi is far more desperate than the Mortgage Bankers Association.

You get the idea now, that a hiccup can wipe out the banks entire equity. For a massive bank like Citigroup to have it’s equity a breath away from oblivion is to be on the death watch list and the talk of that in polite circles is getting louder as it’s share price dips into single digits.

What gets crammed down won’t taste nearly as bad as it will when it comes back up. You can already tell that this one is going to leave a bad taste in somebody’s mouth.


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