Problems emerge in Dubai financing

HSBC said that mortgage holders in Dubai are struggling, and we had this bit in tonight's WSJ:

DUBAI -- Banks that once financed Dubai's six-year real-estate boom are facing the unprecedented challenge of mortgage defaults by overstretched borrowers who had hoped to cash in on soaring property prices in the tax-free Persian Gulf enclave.

Officials at HSBC Holdings PLC, the largest international bank offering mortgages in Dubai, told Zawya Dow Jones last week that the lender has been contacted by a growing number of customers in the emirate struggling to pay their home finance.

Mortgage brokers and others involved in the property market said banks that fail to respond effectively may face problems. "The possibility of mortgage defaults and property foreclosures is a very serious problem for banks here and one that they need to address very quickly," said Chris Dommett, chief executive of mortgage broker John Charcol Dubai. "Many banks will face a steep learning curve, and some won't be able to cope with it."
http://online.wsj.com/article/SB122989061553224671.html?mod=testMod

But never fear, Citigroup is here, ready for more losses in Dubai, finaced by the consumer in the States with higher credit card rates. Just a few days ago, Citigroup's Win Bischoff was bragging about their "billions of exposure" to Dubai.

MANAMA, Bahrain -- With questions about Dubai's looming debt obligations swirling, Citigroup Inc. said it had raised $8 billion for the Persian Gulf city-state over the course of the past year and still had a positive outlook on its economy.

Citigroup Chairman Win Bischoff was quoted in the bank's statement Monday as saying Citigroup continues to see Dubai as among its "most significant markets."

"This is in line with our commitment to the [United Arab Emirates] market in general, and reflects our positive outlook on Dubai in particular," the statement quoted Mr. Bischoff as saying....

Mr. Bischoff, who visited Dubai in November, said at the time that the bank had "lots of billions" of dollars of exposure to Dubai debt.
http://online.wsj.com/article/SB122938868288709017.html?mod=googlenews_wsj

At least Timothy Geithner, who was Citi's primary Federal regulator, will be able to oversee Citi's losses that will have to be born by the taxpayer!