Big banks like Citigroup and Morgan Stanley, which were battered by the 2008 financial crisis, are once again on solid ground.
But a set of documents, e-mail messages and minutes of crucial regulatory meetings released recently by the Financial Crisis Inquiry Commission provide fresh detail about just how close to the brink both firms came.
This week the commission will release another set of documents on its Web site, including an interactive timeline that goes back to the Great Depression. The site will also feature hours of previously unreleased audio recordings of interviews with major players in the crisis, like Joseph Cassano of the American International Group, who was at the center of the credit-default swaps business.
The current documents paint an especially desperate picture of Citigroup, one of the most troubled big banks, which needed several cash infusions from the government during the crisis.
“In short, I will characterize the liquidity and confidence situation as negative and deteriorating such that viability may be threatened without outside support,” a Federal Deposit Insurance Corporation official, Christopher J. Spoth, wrote of Citigroup in an e-mail on Nov. 21, 2008, to the F.D.I.C. chairwoman, Sheila C. Bair.
That late-night missive also contained a chilling summary of a call earlier that day between Citigroup’s risk management team and regulators.
Shares of Citi fell 20 percent, to $3.77, on Nov. 21, 2008, and were down about 60 percent in that week. The liquidity pool of the bank, which had received its first bailout funds just a few weeks earlier, was shrinking and customers were panicking.
The call summary shows that private bank deposits fell $1 billion that day, with $353 million “withdrawn due to Citi name concerns.” The bank was bleeding money elsewhere as well. At 5 p.m., the so-called broker-dealer cash box — the equity and cash that Citigroup keeps on hand to cover short sales — was valued at $15.3 billion. The pot of money had dwindled to $11.4 billion by the end of the day.
Amid the turmoil, counterparties were backing away from Citigroup. “UBS initially cut equity finance lines in half to Citi, from $1.8 billion to $900 million,” the call summary said. UBS temporarily reversed its decision after Citigroup’s senior management reached out to the banks. But the call summary said UBS planned on Monday to ask Citigroup to post additional collateral and would no longer accept certain collateral.
That Sunday, documents show, Ms. Bair chaired a closed-door meeting of F.D.I.C. directors to discuss Citigroup’s rapidly deteriorating financial position. Directors gathered in person and by phone to determine whether Citigroup’s ailing health posed a systemic risk.
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