Posted on 04/17/2009 6:34:51 PM PDT by FromLori
Gee, if there's a "banking crisis" and all these "unusual and exigent" circumstances exist, how come this happened?
April 17 (Bloomberg) -- Citigroup Inc., the U.S. bank rescued by $45 billion in U.S. taxpayer funds, ended a five- quarter losing streak with a $1.6 billion profit on trading gains and an accounting benefit for companies in distress.
Or this?
“Amid a continued weak economy, we’re performing well and our backlog remains strong,” Chief Executive Officer Jeffrey Immelt said in the statement. GE rose 32 cents, or 2.7 percent, to $12.60 at 7:37 a.m., before the regular open of New York Stock Exchange composite trading. The company has lost about 67 percent of its market value in the year since Immelt surprised investors with a first- quarter 2008 profit decline and lowered annual forecast.
The Law is that The Fed can only have these programs open with "unusual and exigent circumstances."
Recessions are neither unusual or exigent, and bank after bank has been reporting positive earnings - which is what one would expect as "usual" and "not exigent."
Time to shut it down Ben!
(Excerpt) Read more at market-ticker.org ...
Lies, Lies, and more Damn Lies. Creative Accounting. They are all insolvent. If they had to comply with mark to market rather than mark to magic they would all be showing losses.
Just a way to sucker more cash out of investors.
GE? Did I miss it? What’s the deal with GE?
They posted earnings today - they are making some money.
The market oversold them, they are pretty solid in many ways. They have $45 billion in cash, that always helps.
You do know what that accounting rule is, don't you?
Really folks, that’s only half tongue-in-cheek.
I haven’t gone through the quarterlies for these firms yet, although I will. But I probably won’t have to write about it separately, because in all probability the same thing is going on here that is going on in these other banks: the “profits” are really a matter of shifted loss reserves, shifted “asset” buckets and other sorts of balance-sheet machination.
Is this “illegal”? No. But does it mean that the cash flow is coming in and happy days have returned?
Lookie here:
While the bank cut compensation costs and took fewer writedowns, it couldn’t halt rising delinquencies on home and credit-card loans. Citigroup benefited from higher fixed-income trading revenue that also bolstered earnings at Goldman Sachs Group Inc. and JPMorgan Chase & Co.
In other words, the banks are gambling with the free money we the taxpayers have given them, along with boosting our costs. Between the two even though credit quality is going through the floor they’re managing to siphon off even more money for their executives, and because this sort of thing makes stock prices go up the government likes it.
Don’t get me wrong - I like rising stock prices too. But I like them to rise due to real business conditions being favorable, because (1) that’s sustainable and (2) that means I don’t have to keep looking for the magical disappearing floor, and can actually invest.
Neither (1) or (2) is true here.
Oh by the way, here’s another reason that Citigroup posted these numbers:
Citigroup posted a $2.5 billion gain because of an accounting change adopted in 2007. Under the rule, companies are allowed to record any declines in the market value of their own debt as an unrealized gain. The rule reflects the possibility that a company could buy back its own debt at a discount, which under traditional accounting methods would result in a profit.
If you want to talk about obscene, that is obscene balance sheet game-playing. What this means is that a firm that has its credit quality decrease, and therefore the trading price of its bonds go down (meaning the market thinks the firm is more likely to default) is able to claim that change as a profit!
Why? Because the firm could “buy back its own debt” at a discount.
Note carefully - the firm doesn’t actually have to buy it back (that would be reasonable - book the profit from an actual realized gain) but because it could it gets to book that as a paper “profit” on its financials.
This is the sort of outright in “accounting” that makes market analysts and investors like me grab for the blood-pressure cuff to see if we’re about to have a CVA. See, a firm that is in distress like this is extremely unlikely to buy back its own debt because the reason it is in distress is that the market believes it lacks sufficient cash earnings power to cover its liabilities! That is, the market is discounting the probability of bankruptcy by trading its debt at a significant discount - and this gets counted as a profit?
This sort of nonsense isn’t new; in point of fact the banks have been doing this all through this downturn! But this is a particularly-egregious example, so here’s the white-hot spotlight Mr. Pandit.
Hope you’ve got some SPF-200 suntan lotion handy.
Citi’s $1.6 billion dollar ‘profit’ also doesn’t include $1.3 billion of preferred stock dividend payments and another nearly $1.3 billion of adjustments to a preferred conversion.
Fed rates at near zero and Citi still can’t report a true profit.
I call them citi fraud for several reasons
CITI-FRAUD, PURPOSELY or incompetently The Resident cut a real bad deal for US!
While sucking us dry to the tune of $45 Billion!
http://www.reuters.com/article/newsOne/idUSTRE52F3MP20090316
Movin on Up to the Treasury
http://online.wsj.com/article/SB123732747181462245.html
US of Citi-fraud, Coincidence??
http://www.americablog.com/2009/02/united-states-of-citibank.htmlh
Top Donor to the Resident’s Inaugeration.
http://www.newsmax.com/insidecover/citibank_obama_donors/2009/01/15/171703.html
From Op Ed
While not on the Center for Responsive Politics list of the top 20 contributors to the Obama presidential campaign, Mayer-Brown’s partners and employees are in rarefied company, giving a total of $92,817 through December 31, 2007, to the Obama campaign. Seven of the Obama campaign’s top 14 donors consist of officers and employees of the same Wall Street firms These seven Wall Street firms are (in order of money given): Goldman Sachs, UBS AG, Lehman Brothers, JP Morgan Chase, Citigroup, Morgan Stanley and Credit Suisse. There is also a large hedge fund, Citadel Investment Group, which is a major source of fee income to Wall Street. There are five large corporate law firms that are also registered lobbyists; and one is a corporate law firm that is no longer a registered lobbyist but does legal work for Wall Street. The cumula tive total of these 14 contributors through February 1, 2008, was $2,872,128
Obama’s Money Cartel
http://www.opednews.com/articles/1/genera_pam_mart_080226
_obama_s_money_cartel.htm
Also see
http://www.opensecrets.org/pres08/contrib.php?id=N00009638&cycle=2008
And how SWEET it is to be on his list of Bribers! Citi-FRAUD who was broke remember?
http://www.reuters.com/article/newsOne/idUSTRE52F3MP20090316
Still broke not long ago and YET!
Now Movin Back On Up!
Citi plans fund to buy undervalued bank debt
Gather up the flock and then shear them.
>>I call them citi fraud for several reasons
http://www.freerepublic.com/focus/f-news/2231665/posts?page=4#4
Birds, Feathers, Flocks...
Tar?
Very interesting. Thanks for posting.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.