Citi-Citi-BANG-BANG ~ KARL DENNINGER

[peaceandlove]

Citi-Citi-BANG-BANG!

Sunday, November 1. 2009
Posted by Karl Denninger

Oh boy, it appears that I may have hit the mark here....http://www.nytimes.com/2009/11/01/bu...html?_r=1&8dpc

Of the company’s $1.2 trillion in credit commitments outstanding in the second quarter, $873 billion were credit card lines

.

And the charge-off rate on those things is over 10%!

Here's what I wrote:

Both of these "results" have a high probability of decimating Citibank's card business and the latter behavior could literally blow them up. That the firm is willing to risk this outcome - an outcome that, to me at least, appears to have a very high probability - means that Citibank has to be crazily-desperate and willing to place an "all-in" bet that they will be able to either (1) book unpaid "interest" as "earnings" and "assets" (much as banks did with negative amortization loans) prior to final disposition via bankruptcy for those consumers or (2) there are enough people who both can't pay off or transfer the balance AND can continue to pay to make this strategy worthwhile even given the intensely negative public opinion reaction this move is guaranteed to generate.

In short, this looks to me like a "Hail Mary" pass. So long as this remains a Citibank-only story my interpretation is that Citibank is in a lot worse financial shape than is being let on - perhaps poor enough that they're at risk of imploding anyway, "too big to fail" or not.

Good luck Citibank; I'll keep my telescope trained in your direction from beyond "minimum safe distance" looking for this....


(Not Karl's original blowup image at his link. Inserted my own!!! LOL)


Disclosure: No position; I don't short stocks under $10. IMHO this issue has a high probability of being a zero.

SOURCE: http://market-ticker.denninger.net/a...G-BANG!-C.html

[Gnosis5]

Thanks for keeping me posted. Cute thread title :-)

Gnosis

[mntruthseeker]

.....

[peaceandlove]

Originally Posted by Gnosis5

Thanks for keeping me posted. Cute thread title :-)

Gnosis

Blessings Gnosis5,

Actually that is the CLEVER KARL DENNINGER'S commentary title.

PaL


Bless all the taxpayers...keeping the sinkin' boat afloat.
I wish someone would bail me out!
Just more of the same from the past...


President Obama: Force Citibank Into Bankruptcy

By Edward Manfredonia
June 18th, 2009

Excerpts:

Vikram Pandit, Citibank's CEO must be bright enough to know that bankruptcy would be the best thing.

Citibank can learn an important lesson from GM.

GM is bankrupt and Citibank is bankrupt.

The only difference is Citi is kept afloat by perpetual loans from the Treasury.

Next time the Chinese, Japanese and Saudis may not bail out America.

Then where shall we go with our tin cups?

SOURCE: http://blackstarnews.com/news/135/AR...009-06-18.html




CitiGroup Citibank BailOut Saved from Bankruptcy with $20 billion

Submitted by Godmode on Mon, 11/24/2008

The U.S. government has finally decided to bailout Citigroup Inc (Citi & Citibank), agreeing to ownership of most of the potential losses on $306 billion of high risk assets and inject $20 billion of new capital, in its biggest rescue of a bank yet. Expert believe if CitiGroup bailout didn't happen they had to file for bankruptcy this week. This could have been the biggest ever banking failure in the world and might have triggered the biggest recession of all time.

The government's $20 billion of new capital comes on top of $25 billion it had put into the second-largest U.S. bank by assets. The government in return receive preferred shares with an 8 percent dividend in return.

Citigroup received the latest infusion after its shares plunged 60 percent last week to $3.77. There were strong rumours that Citibank will be bought over by Goldman Sachs or Morgan Stanley.

Due to the bailout, Citigroup's dividend will be completely wiped out. Investors will not receive a single cent now. The bank cannot pay out more than 1 cent per share per quarter over the next three years without government consent. The quarterly dividend is now 16 cents.

Citibank will now try to modify troubled mortgages in the $306 billion portfolio as the government tries to keep homeowners out of foreclosure.

Shrikant Pandit, CEO of Citigroup quoted post-bail out that Citibank is all set to reduce Citigroup's workforce to 300,000 by early next year from 375,000 at the end of 2007.

Citigroup's market value on Friday was just $20.5 billion, down from more than $270 billion two years ago -- and even below the $25 billion initial capital injection.

If you hold citibank shares in the market, they essential lost its charm. However this is probably not the right time to sell off citibank shares. Hold on to them untill 2010, you might recover more money. I see citibank in the range of $10-$12 by 2010.

Overall Citibak bailout is the biggest ever bailout in the american banking history. We really wish citibank never filed for bankruptcy

SOURCE: http://www.tipsity.com/finance/2008/citigroup-citibank-bailout-saved-bankruptcy-$20-billion



SEE ALSO STEVE A'S THREAD dated 1/15/2009:

Citi Group to go.... Bank of America to follow

http://projectavalon.net/forum/showt...ight=citi+bank

[TheObserver]

Cute thread title :-)

Makes me wonder what my hardcover (with paper slip cover, '72 xmas gift) copy of the Fleming novel fetches on e-bay!


UPDATE:

Chitty Chitty Bang Bang : The Magical Car [Hardcover]..
Item condition: Good
Price: US $9.10

[peaceandlove]

Citibank Dissembling Again: Foreclosures

Thursday, December 17. 2009
Posted by Karl Denninger

This sort of nonsense is exactly the kind of accounting game that I've been yelling about for two years http://www.thestreet.com/story/10647...cm_ven=GOOGLEN .... and as is my usual practice, I'll translate it into English for you in my usual sarcastic fashion (my view of it in italics , of course, with the original (blue) struck out):

NEW YORK (TheStreet) -- Citigroup said Thursday it plans to suspend foreclosures for 30 days for homeowners with Citigroup-owned mortgages.

Under the program, which begins Friday, Citigroup will halt all foreclosure sales on first mortgage accounts nationwide through Jan. 17. The bank also will cease evictions wait until the weather is even colder to throw people into the street in their underwear.

Citigroup's program affects only those loans owned by the bank, about 20% of the company's $746 billion mortgage servicing and lending portfolio, Citigroup said.

Citigroup said the suspension will affect about 2,000 borrowers scheduled for foreclosure and another 2,000 that were to receive foreclosure notifications in the next 30 days.

"We hope that with this suspension we can make the holidays a little less stressful for our customers who are going through a very difficult time We are doing this so as to avoid having to recognize the loss on properties that are deeply underwater, thereby cooking our books until the quarter is reported so we don't have to declare insolvency," said Sanjiv Das, president and CEO of Citigroup's mortgage division, in a statement.

There - fixed it for 'ya.

SOURCE: http://market-ticker.denninger.net/a...eclosures.html