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Citi's Pandit: full of [it] or just moronic?
jr deputy accountant ^ | 03/10/09 | jrdeputyaccountant

Posted on 03/10/2009 5:10:54 PM PDT by Grim

Edited on 03/10/2009 5:14:34 PM PDT by Admin Moderator. [history]

The exquisite fleecing by Citigroup continues, this time with its Chief Executive Douchebag announcing that Citi is up $8.3 bil thanks to an operating profit for the beginning of 2009. This just days after Citi plunged into Dollar Menu territory and came back to suck at the great government teat of FAILout? Hmmm.

From AP:
Citigroup CEO Vikram Pandit says the embattled bank has been operating at a profit through the first two months of the year.

In a letter sent to employees Monday, Pandit said Citi had an operating profit of $8.3 billion before taxes and special items through February. He says that is the bank's best performance since the third quarter of 2007.

Pandit is not saying how large the special items have been. Those would include credit losses, write-downs and additions to loan-loss reserves and would at least partially offset an operating profit.

The letter was written to reassure employees as the New York-based bank's stock has taken a beating in recent weeks as the government is increasing its stake in the bank.

What a [expletive deleted by FR Mod] tool. The Dow rallies, everyone calls a market bottom, and rejoicing ensues on Wall Street? Give me a break. Big picture, people, big picture:

Wall Street snapped out of its stupor and posted its best performance of the year Tuesday, finding a badly needed glimmer of optimism in the most unlikely of places: Citigroup is actually managing to turn a profit. The 379-point gain for the Dow Jones industrials, a rally of almost 6 percent, was a welcome break from almost uninterrupted selling. But just as almost nobody expects the banks to snap back to health, almost nobody thinks the market has hit its bottom.

"One day isn't going to make a trend," said Kurt Karl, chief U.S. economist at Swiss Re. Even a child could see that an operating profit doesn't mean a thing when 36% of you is owned by the U.S. government. Motley Fool's Morgan Housel put it best, saying:

This is no exception. Citigroup's announcement that "Hey, hey, we're actually profitable!" is twisted, tortured, and largely irrelevant to its ultimate fate.

The gist of Pandit's memo was that operating profit was going gangbusters -- as if operating profit has been the problem all along. The problem is not a bank's ability to generate current income, but its ability to absorb losses on legacy assets that are worth a fraction of their purchase price -- using absurd amounts of leverage to boot.

The memo disclosed numbers that point to an operating profit of about $8.3 billion this quarter, but Pandit didn't give any mention of what asset writedowns would be. "In January and February alone, our revenues excluding externally disclosed marks were $19 billion," he said. Great! Now... uh... about those "externally disclosed marks?" How are those workin' out for you?

I'm not worried that Citigroup can't generate operating profit: I'm worried it's not solvent. There's a big difference. Imagine a person drowning in debt but insisting they're wealthy because their paycheck exceeded their grocery bills. You get the idea.

Can someone please tell me what kind of rocks Wall Street is smoking?

Perhaps they have dipped their crack pipe into Bernanke's stash, as he is obviously delusional as to what is going on here as well.


TOPICS: Front Page News
KEYWORDS: fraud; lies; morelies; smokingcrack
The gist of Pandit's memo was that operating profit was going gangbusters -- as if operating profit has been the problem all along. The problem is not a bank's ability to generate current income, but its ability to absorb losses on legacy assets that are worth a fraction of their purchase price -- using absurd amounts of leverage to boot.
1 posted on 03/10/2009 5:10:54 PM PDT by Grim
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To: Grim

Ssshhhh.....the sheeple want optimism. Tomorrow pink ponies will fly.


2 posted on 03/10/2009 5:12:22 PM PDT by anniegetyourgun
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To: Grim

people heard the headlines and the market was up... now they know it was a fib. expect a further fall.


3 posted on 03/10/2009 5:13:29 PM PDT by GeronL (Will bankrupting America lead to socialism?)
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To: Grim

I just wrote on another thread that I think this CEO put this out so some in the know people can sell at a higher price before the “real” quarterly reports come out.


4 posted on 03/10/2009 5:14:21 PM PDT by autumnraine (Freedom's just another word for nothing left to lose- Kris Kristoferrson VIVA LA REVOLUTION!)
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To: Grim

A pump and dump scenario?


5 posted on 03/10/2009 5:24:13 PM PDT by dynachrome (Barack Hussein Obama yunikku khinaaziir)
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To: Grim

What really kicked the rally into gear was when Barney Frank said they were going to reinstitute the uptick rule and make changes to mark to market. The regulators have been really leaning on the banks to write down the value of mortgage backed securities. If they go to mark to model(for instance you take the current default rate of approximately 30 percent for sub-prime and value the asset based on payment in full of the remaining 70 percent) the banks would be literally drowning in available cash. I believe this possibility led to the upturn in the market.


6 posted on 03/10/2009 6:08:07 PM PDT by cdpap
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To: dynachrome
What law school really trains good prosecutors? This story is portaring the outfit as ......frankly tits-up might be my first reaction..... Just my farm-boy opinion....show me the books.
7 posted on 03/10/2009 6:08:24 PM PDT by pointsal
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To: Grim

Your quote exactly says it. Investors were rolled today by the Citi announcement.


8 posted on 03/10/2009 6:35:42 PM PDT by expatpat
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To: Grim

‘Profits before taxes and special items’ don’t count as profits.

Maybe I’ll sell my business based on that philosophy.


9 posted on 03/10/2009 6:54:22 PM PDT by AlmaKing
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To: AlmaKing
Who is their accountants? Arthur Anderson or some other outstanding,out of business CPA firm?
10 posted on 03/10/2009 7:28:32 PM PDT by Dream Warrior (Never call retreat!)
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To: AlmaKing

LOL... Special items.. What the heck does that mean?

Losses~!


11 posted on 03/10/2009 8:04:06 PM PDT by nhwingut (,)
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To: dynachrome
In order for the current crowd to make money in the market, it has to go up and down. In the past few weeks, fortunes have been made on the short side of many sectors; the financials in particular, represented by SKF, today the fast money moved out even faster, giving an irrational jolt to the market. Soon this play will become irresistible again (SKF: $120-$140), a turkey shoot as these banks are black holes for capital.

Until this game is stopped somehow, investors will step back as day traders swoop in for a few points, shorts will rush in and traders will flush at the first sign of a swoon, fundamentals be damned.

12 posted on 03/10/2009 9:28:46 PM PDT by GregoryFul
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To: anniegetyourgun

Ok, so having hundreds of billions in deposits, that you pay literally no interest on, while keeping all the interest, even leveraged to yourself... You don’t think that incredibly profitable?

Seriously, I can’t make it any more obvious for you than that.

Back in 2001 and 2002 it was the same story. So, you fix your liabilities from current income.

It is a natural cause and effect of the interest rate cycle, nothing evil about it. And without it, what the heck would we do then?

Seriously, this is exactly what we need, and hopefully it is in time to save many smaller and mid size banks that are more vulnerable than the big ones.


13 posted on 03/10/2009 9:35:06 PM PDT by Professional
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To: expatpat

No they were not. If you had a huge overhead personally, teetering on the brink of not paying your bills, do you mean a big pay raise, earned income, would not be a way out of it?

Every bank in the nation now is printing money on an operating basis. Duh, it is one of the primary reasons why the fed lowered rates...

Customers are now, given a choice. Earn little or nothing now, or find an investment like bonds, stocks, real estate where you might actually make something. Some will find the comfort in fdic insured deposits, but many others will find better things to do with their money. Over time, that temptation will grow and grow, as people come out of their safe/fear driven shells.

Basically, the Fed right now is the friend of investors. Later, they will indeed turn upon the greed growing public, just like always. And that is why the Fed is more powerful than the administration.


14 posted on 03/10/2009 9:39:52 PM PDT by Professional
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