Asymmetrical Information

It turns out that Citigroup

It turns out that Citigroup managed to hedge its exposure to Enron, unlike every other bank that did business with them. The article suggests that the hedging instruments were somehow suspicious, because the interest rates were too low, but from what I can tell (not much), it arrives at this instrument by comparing apples to oranges: long term corporate bonds to shorter term credit-linked notes.

Interesting is what the article leaves out: that Citigroup employs Bob Rubin, who approached the administration on Enron's behalf right before the pyramid collapsed. Personally, I doubt there was anything unethical; it seems to have been good banking sense to lay of risk. Nonetheless, this non-story seems to my (admittedly jaundiced eyes) to be at least as compelling as the Bush-Enron connection. I had an earlier email on this from J. Bowen over at No More Watermelons, but forgot to post it.