How big is Citadel?

I wish I could tell you.  It is not a public company, so they do not report their financial data to the SEC.  All I can find is the blurb on their Web site:

In 1990, one year after graduation, Griffin launched Citadel with $4.6 million in investment capital. Today, Citadel deploys more than $20 billion across multiple investment strategies.

While initially focusing on U.S. convertibles, Citadel soon expanded into other markets, including European convertibles and merger arbitrage. As Citadel’s investment focus expanded, so too did the team, as Citadel attracted top talent from around the world.

By 1998, Citadel had grown to more than $1 billion in investment capital, deployed globally through a variety of quantitative, event-driven, and fundamental approaches.

Today, Citadel has expanded further, having built market-making and hedge fund administration businesses, as well as a business that deploys capital with unaffiliated managers. Citadel’s broad array of businesses and global footprint put it at the center of the capital markets, and redefining what it means to be a leader in alternative investments.

Apparently, there are rumors that the Fed is visiting some midwest hedge fund today.

Citadel is denying these rumors.

“Categorically false. We continue to do business as usual around the globe,” Citadel spokeswoman Katie Spring said.

She added that the fund continues to hold 30 percent of its assets in cash. Rumors that Citadel was lobbying for access to the Fed’s discount window were also false, she said.

Why would the Fed be paying a visit to a hedge fund?  Hedge funds are not banks.  The Fed does not regulate them.  The Fed could make loans to a hedge fund, or maybe force a shotgun marriage to a real bank (facilitated by some FedLube™).

So, what, we start monetizing hedge fund losses now?  Honestly, I do not get it. $20 billion just does not sound like all that much of a “systemic risk”. Well, unless it is levered up…

Update 2008-10-26

Dealbreaker cites Reuters citing the WSJ:

Examiners with the Federal Reserve have questioned Wall Street counterparties about their exposure to debt and other holdings of Citadel Investment Group, The Wall Street Journal said on Saturday, a report Citadel denied.

See also Simon Johnson (just subscribe to his blog, seriously): Hedge Funds, An Impression

There is no way that any responsible government could let a large Hedge Fund fail at this point.  The system is too fragile and the risks too obvious.  In fact, the Europeans ratcheted up the pressure in this regard during the week, with their increasingly undiplomatic condemnations of the US for not saving Lehman.

The hedge fund bail-out is coming.

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