By Joe Kay | WSWS.org
On Monday, US banking giant Citigroup announced a deal with Abu Dhabi to secure a $7.5 billion cash infusion. The arrangement is intended to shore up the bank’s financing amidst an ongoing credit crisis, but the desperate character of the deal is an indication of the deep crisis facing American capitalism.
Citigroup—the largest US bank and the largest corporation in the world measured by assets—has been particularly hard hit by the deflation of the US housing market, which has called into question the value of hundreds of billions of dollars in mortgages and securities.
Certain basic measurements of the bank’s financial health have fallen sharply in recent months—in particular its capital ratio, representing the amount of assets the bank has relative to its liabilities. To provide a temporary bandage for this problem, the bank arranged the deal with the Abu Dhabi Investment Authority (ADIA), a state institution of Abu Dhabi, the capital of the United Arab Emirates.
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