Part trois:
Even with occasional regulatory restraints, Citigroup’s assets ballooned from $1.49 trillion to $2.19 trillion from 2005 to 2007, an increase of 46.9 percent (and three times the size of Citigroup’s balance sheet when the merger that created it occurred).
But amid that impressive growth, dubious mortgage loans and questionable trading in mortgage and other debt-related securities began to undermine Citigroup’s finances. One ugly class of securities continues to haunt the bank: collateralized debt obligations, or C.D.O.’s.
From 2004 to the beginning of 2008, Citigroup underwrote $70 billion in C.D.O.’s but had to keep $57 billion of that amount on its own books when it couldn’t find buyers, according to a class-action lawsuit filed in federal court in Manhattan, on behalf of disgruntled Citigroup investors. The suit contends that by late 2006, Citigroup’s C.D.O. operations “had devolved into a Ponzi scheme where unsold portions of older C.D.O. securitizations were recycled as the asset base for new C.D.O. securitizations.”
parsy, who says now we are into the derivatives
What derivatives do you imagine we're into now?