Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

The result of the Treasury’s “sovereign” intervention was to extend a huge subsidy to the banks, increasing the value of their businesses by perhaps as much as $131 billion.110 The biggest beneficiaries were the fragile investment banks and the sprawling colossus of Citigroup. Citigroup received $25 billion from the Treasury in exchange for securities valued at $15.5 billion and soon to be worth much less. In contrast, Wells Fargo, widely regarded as one of the banking industry’s stronger players, gave approximately $23.2 billion worth of securities for its $25 billion in government capital.111 J.P. Morgan did not need the money, and by agreeing to go along with the government’s efforts to stop the run, Dimon passed up the opportunity to predate any more of his weaker competitors. For critics of the bailout, like Sheila Bair of the FDIC, it seemed that the entire process was a smoke screen put up to hide a bailout of Citigroup.