With estimates of the losses from the subprime mortgage fiasco spiraling past $100 billion, Citigroup, Bank of America and similar citadels of financial genius are deep in a huddle with the Treasury over some sort of rescue operation. Pundits are shocked at the prospect of taxpayers bailing out companies whose middle managers are distraught if their year-end bonuses come to less than seven figures. After all, deregulation and global competition was supposed to banish the cozy relationship between big business and big government that justifies corporate welfare under the slogan “Too Big to Fail.”

But a look just south of the border–where Citigroup has also been making headlines–reminds us that crony capitalism is not some anomaly that rears its hypocritical head in times of financial crisis. It is built into the DNA of multinational banking.

On October 17 the Mexican government announced that a syndicate organized by Banamex, Citigroup’s Mexican subsidiary, had bid for and won at auction Aeroméxico, the country’s largest airline. Having bailed out Aeroméxico’s former owners eighteen years ago, the government owned a majority of the company’s stock, which it was now privatizing.

The news was accompanied by photo-ops of smiling bureaucrats shaking hands with happy plutocrats from the Citigroup/Banamex syndicate. Frontman for the syndicate is José Luis Barraza, a major fundraiser for Mexican President Felipe Calderón. Barraza financed the vicious campaign attack ads against leftist candidate Andrés Manuel López Obrador, which were a major factor in Calderón’s narrow and possibly fraudulent victory last year. A Mexican court later acknowledged that the ads were illegal but with a straight face declared that they didn’t affect the outcome of the election–won by 0.5 percent of the vote.

Shortly after the announcement of the Aeroméxico sale, it leaked out that Citigroup/Banamex had not been the highest bidder. Less than three minutes after its bid, the government was offered a higher price by a group headed by a businessman to whom the Mexican president did not owe any favors. The Calderonistas disqualified the higher bid on the grounds that it had come too late, i.e., after a deadline that Citigroup/Banamex had insisted the government impose. The decision violated the law, which forbids arbitrary closing of a privatization auction under such circumstances. When the losing bidder was asked if he was going to sue, he declined. He had plenty of evidence the deal was rigged, he said, but the fix was in, and there was no way he could beat the Citigroup-government alliance in a Mexican court.

As one Mexican newspaper put it, Citigroup/Banamex got control of an entire airline for practically the price of one new advanced-design airplane. Moreover, at least part of the money Citigroup/Banamex is paying the Mexican government for Aeroméxico comes from huge subsidies the bank is already receiving from–you guessed it–the Mexican government.

In 1982, when the peso crashed, the government bought Banamex as a way of rescuing the bank and its Mexican owners from bankruptcy. In 1991 Mexican President Carlos Salinas resold it for $4.6 billion to a business group headed by a close ally, Roberto Hernández. Two years later Salinas signed the North American Free Trade Agreement, which included a timetable for dismantling Mexico’s law against foreign ownership of its commercial banks. The foremost champion of NAFTA in the Clinton White House was economic adviser Robert Rubin, formerly co-chair of Goldman Sachs. When another peso crisis hit Mexico in 1994, Rubin, then US Treasury Secretary, financed a bailout of the Wall Street holders of Mexican bonds. As part of the complex deal, Salinas’s successor, Ernesto Zedillo, agreed to accelerate the opening up of Mexican banks to foreigners.

At the same time, Zedillo rescued the Too Big to Fail Banamex by buying its largely worthless portfolio of uncollectible loans–on credit. Mexican taxpayers are still paying Banamex interest for the government purchase of the bank’s junk securities a dozen years ago. The exact amount of the subsidy is buried in obscure government accounting, but a 2004 estimate was that the government still “owed” Banamex roughly $4 billion.

In 2003 the Mexican government subsidy to the banking industry–by then almost totally owned by foreign corporations–was three times what it was spending on roads, school buildings, health facilities and other infrastructure. This, in a country where 42 percent of the people don’t earn enough to support a minimum Mexican market basket of food, clothing and other essentials.

In 1999 Rubin resigned as Treasury Secretary to become chair of the executive committee of Citigroup. Two years later, shortly after the date on which Mexico had to open up its banks to foreign ownership, Rubin flew to Mexico to buy Banamex for $12.5 billion plus a seat on the Citigroup board for Hernández. The Mexican press reports that the well-connected Hernández masterminded the Aeroméxico deal, which will provide Citigroup/Banamex with substantial revenues from financing airplane leases and insurance, along with being the preferred banker for the airline’s suppliers.

As the icing on this very lucrative cake, the Calderón government decided that the Citigroup/Banamex gang should not have to pay the normal sales tax. Sales taxes, it was explained with a straight face, really fall on the seller, not the buyer (try this out next time you go to the store), and since the seller was the government, there is no point in the government paying the sales tax to itself. Neat. No wonder the Citigroup board just elected Rubin to be its chair.

So here is your global free enterprise system (a k a socialism for the rich) at work: Citigroup/Banamex, which is Too Big to Fail in the United States, has also been deemed Too Big to Fail by the Mexican government and is being subsidized by Mexican taxpayers to buy Aeroméxico, also Too Big to Fail.

The World Bank, IMF and other neoliberal hangouts are still pushing developing countries to open up their financial markets to multinational banks, precisely on the grounds that it will eliminate crony capitalism. The idea, you see, is that these global wheeler-dealers will bring First World standards of competence to the Third World. And so they have: Banamex, like its Citigroup owner, just posted a massive loss for the last quarter. It seems Banamex has also been pushing subprime loans, via credit cards, to people who don’t earn enough to pay them back.

Citigroup, by the way, operates in more than 135 countries. Taxpayers of the world: hold on to your wallets.