Monday, October 17, 2011

Citigroup 3rd Quarter Results Do Not Disappoint

my expectations that it would be at least as fraudulent as was JP Morgan's.  Caution:  investing based on bank earnings headlines can be hazardous to your wealth.

True to his corrupt character, Citigroup CEO Vik Pandit ushered in Citi's headline-reported bullshit by exclaiming that "Citi continues to navigate a challenging economic environment and delivered another quarter of solid operating results." 

Citi reported Q3 net income of $3.8 billion and revenues of $20.8 billion, both on a "headline" basis above Q3 2010 and 3 cents above Wall Street estimates.  Now for my "however" reality analysis.  Citigroup included $1.9 billion in its revenues by pretending to go out and buy back its debt at a discount (CVA) and it reduced its loan loss reserve by $1.4 billion.  By pretending to buy back its debt, Citi boosted its reported net income by 39 cents per share.  While it's not being discussed, probably because Citi didn't show the math in its earnings report like it did the debt buy back fiction, the loan loss credit is a direct add-in to net income, and thus contributed about 47 cents to its bottom line.  Both the CVA and loan loss fraud boosted Citi's reported, headline net income per share by 76 cents.    Both of these revenue/income add-backs are non-cash and did nothing to generate any kind of real cash flow or economic benefit for the company.  They are pure, 100% unadulterated earnings "management" - i.e. fraud - maneuvers.

So the TRUTH of the matter is that a better GAAP estimate of Citi's earnings per share would be 37 cents per share, instead of the $1.23 per share headline report.  A huge miss vs. Wall Street expectations.  If you look at just the "organic" business numbers, Citi's revenues declined vs. the same quarter in 2010.  It's business and net income are getting smaller.  Shining a spotlight on the truth therefore makes CEO Vik Pandit a liar, because the true business results are anything but "solid."  Here's the 8-K filed with the SEC, for anyone who wants to ruin their evening by looking through it:  LINK

Remember, Citigroup is still partially owned by the Treasury/Taxpayer, so when Citi pays that scumbag a big bonus this year, it will be your tax dollars he receives, not any kind of "economic rent" - i.e. real cash flow - generated by Citi's business model. 

Speaking of Taxpayer-owned "special needs" corporations, I see AIG is once again hosting lavish sales parties at expensive resorts.  You can read about it HERE  That's just more of your tax dollars going down the crapper in the form of expensive wine, food and - most likely at night - Charlie Sheen-style hookers. 

One more point on the Citi financials.  I don't have time to really go through the recent 8-K and latest 10-K and show where Citi is really committing fraud. But I can guarantee that on a true "cash basis" and "market value" basis, Citi is insolvent.


  1. Lets talk about more important things like another CFTC anti climax tomorrow. Citi is dead to me.

  2. What was that broken hedge fund pandit the bandit dumped onto citi?

    Dylan Ratigan interviews David DeGraw about the political impact of Occupy Wall Street, and Bill Black joins to discuss legal strategies.

  3. Sprott plans a gold bank without loans or leverage

    Eric Sprott, one of the most vocal critics of the global financial system, wants to start a bank. But it won't be like any bank most people are used to seeing.

    Mr. Sprott and the asset management firm he founded, Sprott Inc., are investing in an Ontario-based currency trading company known as Continental Currency Exchange Corp. They, along with the current management of Continental, are applying to federal regulators for permission to turn the 17-branch operation into the Continental Bank of Canada. They expect to get a decision early next year.

    The bank Mr. Sprott and his partners envisage would seek to address all the things that Mr. Sprott has warned against in the global financial system, such as too much leverage and a lack of confidence in paper currency.

    Continental Bank would take deposits, but it would make no loans, unlike most current banks that are built on a model of lending out far more money than they actually have on hand.