Maggie's Farm

I could write for hours about Citi - from how it has one of the best corporate and investment banking platforms to the catastrophic failures in risk management and management in general.

Complicity in this mess reaches to Alan Greenspan's Fed, the federal government, the banks and investment banks (Merrill, UBS, Citi, Lehman, Goldman, all of them), brokers, borrowers (both speculators and those who knew they could not or would not pay), hedge funds and other investors searching for yield in a high value, low yield world.

However, many Citi employees, who had nothing to do with the subprime mortgage mess, SIVs and CDOs, are getting hurt in all of this. In fact, many innocent people around the world are being hurt by the contraction of credit, economic slowdown and loss of employment.

There is plenty of criticism to go around, including for Citi executives and employees. I am as upset as anyone is. Nevertheless, I would not paint everyone with the same brush, although I understand the temptation.

There will be several lessons learned from the current credit crisis. Here are a few (and I know there are more).

1) There are reasons why some borrowers fail to qualify for loans (e.g. lack of income) and extending credit to those who cannot pay is a bad idea and if politicized, a really bad idea. (This is the every American should be able to buy a home myth.)

2) Risk management must look forward at developing economic trends and not just look backward at statistical rates of default.

3) Financial innovation carries risks and just because this is so it does not mean the financial innovation is somehow bad.

Let's just hope we get through this as quickly as possible (although 2009 looks like it will be rough) and that government does not become needlessly intrusive.