I been watching this Citi over the weekend. It seemed like things were merrily heading towards the government giving them a ton of money to solve all their problems. Then all the sudden everything went haywire.

Read this article from CNBC and you can get an idea of how fast things changed. Two updates on one article is hardly normal.

Naked Capitalism has more. Though I must say I take strong exception to this…

But the real problem is more basic. Why does the Administration need to be fair? This is a one-off, emergency measure. The fact that it is worrying about other banks demanding the same deal suggests the terms are not sufficiently punitive to Citi management (note the stress on the impact on the key actors). But even if it is not as nasty as it ought to be to Citi, people in power have the right to be capricious. Citi is unique on so many dimensions that it is easy to argue that a deal for Citi need not apply to anyone else.

I think that the idea that people in power have the right to be capricious is more harmful then Citi’s collapse could ever be.

Edit: Forgot to put the link in. Fixed now.