What happens with IB accts if Citi goes under?

I know its guaranteed by SIPC(up to $100K in cash claims), but do we have to worry about downtime?

 

IB keep the money in a number of different banks. If citi is nationialised no depositers will lose money but shareholders will lose their investment.

 

C will not go under, ingore that possibility. Even without TARP funds, the FDIC has the authority to intervene in large commercial bank failures so the odds of a failure are close to zero

 

But failure is not exactly the same as nationalization. Or do you think C won't even be nationalized? What about BAC?

 

In nationalization MAYBE the senior bond holders will lose some money but the depositors will be safe given that as a government bank they will have infinite access to liquidity and capital. Just a hint of a haircut to depositors by the treasury would lead to a cascade of electronic runs in the big banks

 

I agree with you there, but is it your opinion that the C and BAC shareholders will be wiped out?

 

Pretty damn likely given that Obama will try to punish them for political purposes, the preferred shareholders might get wiped out too like in FNM FRE and WM case. The debt is likely to be protected like in the gses