GIC, Temasek bank investments continue to bleed

November 24, 2008
Singapore Democrats

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Singapore Democrats

The Government Investment Corporation led by Mr Lee Kuan Yew poured in nearly $7 billion in Citigroup in January this year. Today, the banking “giant” had to be bailed out after its dramatic collapse.
 
Bloomberg News had this to say:

Over and over, as its stock price plunged last week, Citigroup Inc. repeated the same tired line. Citigroup has ‘very strong capital,’ the bank kept saying.

Its capital was so strong that the New York-based lender yesterday was ironing out yet another federal bailout. One lesson here is: There’s something very wrong with the way Citigroup and the government measure capital…

So, in truth, Citigroup had little, if any, real capital, even if the values for all its toxic loans and mortgage-related investments had been accurate. Most of the above-listed items won’t help the bank absorb losses. Rather, they are the kinds of things that cry out for more capital.

What we need from America’s banks is for their leaders and regulators to start speaking with credibility.

I’ve had enough funny numbers. (See report here).

What were the self-proclaimed super-duper investors at GIC doing all this while? Obviously they were just throwing money – our money – around without due diligence. Are our savings and reserves still safe from all this financial bloodletting?

In another investment story, Standard Chartered announced that it had to raise more capital – $2.7 billion to be exact. Shares of the bank dived after the announcement. Stan Chart stock declined 60 percent this year. Temasek is the biggest investor in Standard Chartered.