Sure, except Dizard is not talking in the past tense about old news, he seems to be describing something of an entirely unprecedented degree and extent. $12 billion is a lot, but in a market capitalization of $230 billion, the existing shareholders aren’t hurt that much. On first reading, it seemed to me that Dizard was talking about practically outright replacing the existing shareholder base. I guess I just misread it.

By the way, Fortune has an article about how Julian Robertson has placed a big bet on “curve steepener” derivatives to take advantage of precisely the sort of steeper yield curve being predicted in the article here.

You need to get caught up. Here’s the relevant portion of a Reuters report from a couple of weeks ago on how Citi dealt with its need for a few extra billions:

Massive write-downs cut into Citi’s already depleted capital base during the fourth quarter, spurring the bank to sell $12.5 billion of convertible preferred securities to investors including Singapore’s and Kuwait’s governments, Saudi Prince Alwaleed bin Talal, and former Citigroup Chief Executive Sanford “Sandy” Weill.

So if I’ve got Citi common stock, all the guys mentioned above just cut ahead of me in line for dividends. It’s already happened. You don’t have to wonder how it will come about.

A more realistic perspective is simply the emergence of new lending entities, if demand for loans is there but existing banks are impaired in their lending capacity due to balance sheet issues and securitization fails to revive. Existing banks would hang on but remain marginal. Sovereign wealth funds offering non-dollar-denominated loans to US corporations, perhaps? Or, if the yield curve will be rigged steeper to deliver guaranteed profits to banks to help them shore up their balance sheets in the time-honored manner, maybe Warren Buffett would start a bank? The logic is the same as for entering the monoline insurance business: steady large profits practically guaranteed as long as you don’t go wild and lose your head and dabble in things you don’t understand.

For years, Wal-Mart tried to start a bank, but finally gave up, although they did recently start a bank in Mexico. Maybe Buffett would have better luck with regulators.

Do you mean to imply that the fluorescent -haired tatooed derivative traders will have have to wear extra large glasses like Warren Buffett and shave those beards, as they mark-to-market Level 3, unobservable assets which probably will disclose the nature of what thin air looks like, in relation to actual value?

See also: Warren Buffett & $33 Billion in goodwill accounting and his latest bond deals with Custodial Receipts and his simple farmboy conservatism which are connected to his plans for his own rating agncy….

More vodka!