Why the Citi Never Slept

Citi's sleepless nights – and now its bailout – resulted from nightmares about Collateralized Debt Obligations. Yesterday's New York Times tells the story in depth.

Citigroup's risk management failed because of disorganization and cronyism, the Times reports.

But Citi has plenty of Wall Street company in its failure to manage risk. Here's one theory why:

Once a large corporation appoints a risk-management officer, the rest of the management team figures it can ignore risk.

And that's assuming management understands the monsters created by its financial engineers. Citi's shareholders aren't amused when they read that former CEO Chuck Prince "didn’t know a C.D.O. from a grocery list."