Citi Needs Up to $10 Billion in New Capital 32 comments
an article to
-
Font Size:
-
Print
- TweetThis
WSJ out with a stunner, explaining the reasons behind the delay of the stress test releases until May 7th. And if Citi (C), which already has done some massive creeping equitization of its preferred stock is still in this much pain, one can only imagine what lies in store for Bank of America (BAC) and even Wells Fargo (WFC).
From WSJ:
Citigroup Inc. may need to raise as much as $10 billion in new capital, according to people familiar with the matter, as the government continues negotiations with banks over the results of its so-called stress tests.
The bank, like many others, is negotiating with the Federal Reserve and may need less if regulators accept the bank's arguments about its financial health, these people said. In a best-case scenario, Citigroup could wind up having a roughly $500 million cushion above what the government is requiring.
For certain banks who can't raise new funds from private investors, federal regulators are allowing banks to consider giving the government stakes in their common equity, people familiar with the matter say. That would help fill their capital needs but would also raise thorny questions about how close a role the U.S. will play in their daily operations.
The outcome of the stress tests could play a major role in shaping the next phase of the U.S. government's intervention in the nation's ravaged financial system. After the results, banks will have 30 days to give the government a plan and six months to put it into effect. The banks are expected to reveal their plans next week.
Concerned about investor and depositor panic, government officials have said banks needing more capital should not be viewed as being at risk of collapse. In fact, the government has said it would not allow any of the 19 banks undergoing the test to fail.
Banks have been scrambling over the past week to refute the Fed's preliminary conclusions. Bankers say those negotiations are part of the reason the government has pushed back its announcement of the results.
"The gloves have been taken off, and there's some real battles going on right now," said Gerard Cassidy, a bank analyst with RBC Capital Markets.
The last paragraph from the WSJ article is simply the most stunning example of the banks' ongoing hypocrisy:
Some banks are haggling with the Fed over how it calculated their projected 2009 and 2010 revenues -- a central factor in gauging banks' ability to absorb losses. Some have pushed the Fed to use their strong first-quarter performances as a baseline, even though many acknowledge their first-quarter results are likely unsustainable.
They are haggling with the Fed based on their "strong" first quarter results (which were all due to taxpayer gifts to every single bank via the AIG funnel)? Come again? Are there any boards of directors left at any of these firms to supervise the sheer lunacy that management teams projectile vomit in the general direction of Barak Obama, Tim Geithner and CNBC's audience?
Why should Chrysler creditors be forced to suffer and be scapegoated in front of the entire world, while we don't know who one single large creditor of Citi or of BofA is? .... but we can speculate...Hey Obama/Tim - how about some bank creditors suffer a loss here and there too in your witch hunt against "all those self-serving Wall Streeters." Does it maybe have to do with the fact that these are not really Wall Streets at all but the very same gullible fools who are supposed to lap up the $1 trillion + in USTs you will be shovel feeding over the next year... yes, the same investors who still have their investment in Freddie and Fannie marked at par compliments of Uncle Sam and Joe Taxpayer.
All is good though: CNBC just announced that all is priced in, and that no bad news can ever move the market lower as everything negative has been factored in every single stock price in perpetuity and then some.
Enough with the hypocrisy! When is Lewis Black going to do a Wall Street special?
Related Articles
|
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most active
Instabloggers.-
1
David Fry
-
2
TraderMark
-
3
Don Dion
-
4
Cliff Wachtel
-
5
Joseph L. Sha...
Top Instabloggers » -
1
-
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
As for citi being fine, I already know the government has rigged these tests as much as they can to benefit the banks. I know they rigged he accounting in the banks favor, I know the conditions used in the stress tests aren't all that bad. so even with all the help they have been getting the result may be bad. That tells me it is much worse than that.
On May 03 12:53 AM William Cowie wrote:
> A good point was made though: how come not a single stakeholder of
> a single zombie bank has been required a single cent's worth of sacrifice?
> What hold do they have that Chrysler and GM don't?
Your point is well taken. But, you say you worked "in business journalism" for many years but left to consider a diferent career. "It is supposed to be impartial and truthful, but I came to believe that it is rarely both at the same time, and likely neither of the two as well (with some rare deserving exceptions)," you wrote. Are you saying you, too, didn't write the truth or were told what to write? I am confused. It seems you are convicting yourself of the same things you decry.
That being said, there is a huge distinction between business journalists and those such as the writer of this "blog." To me, this is not a business journalist article, just an opinion of a blogger, most of whom I've noticed have a hard time putting complete sentences together let alone giving factual opinions.
Sadly, many uneducated and uninformed readers tend to believe this junk to be real news. That is why the Internet often is nothing more than a cesspool of deliberate misinformation. People need to get back to reading respected periodicals.
BigJ
On May 02 11:44 PM jacob1 wrote:
> Most of today's so-called business journalists are not up to the
> name, and for lack of a better word, largely suck. I can tell you,
> I worked in business journalism for some years, saw it from the inside,
> and finally decided to pursue another career. It is supposed to be
> impartial and truthful, but I came to believe that it is rarely both
> at the same time, and likely neither of the two as well (with some
> rare deserving exceptions). The above article is a case in point,
> written more like a college term paper with a strong bias already
> in mind, and relying entirely on someone else's premature reporting
> - as the outcomes on the stress test will not be known for another
> few days. So what we have here in the end is pure speculation, getting
> re-spun all over the place. In the Journal article it goes all the
> way from saying Citi may need up to $10 bil, or it may need nothing
> at all - and have a $500 million comfort margin. All in the space
> of a few lines. Huh? So what is the point of the whole piece - just
> to confuse the reader and agitate the market? Or does the reporter
> have some other not-so-subtle agenda in mind, in between the lines
> - so to speak. I would've respected Mr. Durden much more if he would
> have picked up on this, as even the most casual readers would have,
> unless they have a personal financial interest in mind. Which to
> me would be surprising, especially these days
>
> A case in point on another story. Look how two different news organizations
> headlined differently the same exact news event earlier today:<br/>
>
> MarketWatch:
> "Buffett tells shareholders He Sees Signs of Stabilization in the
> Housing Market."
>
> Bloomberg:
> "Buffett Says He Sees ‘No Signs’ of Recovery in Housing"
>
> MW link:
> www.marketwatch.com/ne......{87B652DA-03A2-4A86...
>
>
> Bloomberg link:
> www.bloomberg.com/apps......
How about some scenario models? Ex:
- Citigroup is required to raise $10Bln, but this does not include the preferred stock conversion.
- Citigroup is required to raise $10Bln, including the maximum preferred stock conversion.
- Citigroup is required to raise nothing, and no stock conversion is required.
- Citigroup is required to raise between 0 and $10Bln, without conversion.
- Citigroup has $500 million more than they need, and no conversion is necessary.
This article, written by someone with over a thousand sheep, er, I mean followers, is nothing more than a biased reprint of a chosen article written buy something who can't name their sources and whose writing is sub-par at best.
credit brought us in and credit will take us out.
LOOK TO THE YIELD CURVE FOR ANSWERS PEOPLE! the banks will be profitable once again.
they will top estimates going forward as the spread widens. highest since 1991 according to a recent bloomberg article. i like the sound of this and remember the last time the yield curve made news? it was june 2007 when it went inverted and oh yes 6 months later we were in a recession. look at its track record as a leading indicator if you are a skeptic.
On May 02 08:28 PM LivingFractal wrote:
> It's fairly clear to any non-biased observer that the situation Citigroup
> is in right now is fairly good. Therefore it is fairly clear to
> any non-biased observer that Mr. Durden Of The Unoriginal Name is
> either 1) uninformed, and misleading people thus, or 2) purposefully
> spinning this news negatively. One presumes that if the former is
> the case then perhaps we readers should take pause in the future
> regarding spending our time on articles written by Mr. Durden Of
> The Unoriginal Name. One further presumes that if the latter is
> the case, then we should especially be concerned, unless we too are
> short C, and wish to be able to cover Monday when the stock reacts
> as it undoubtedly will to this news: bullishly.
On May 04 07:40 PM cayman a-d wrote:
> i hate the doom and gloom tone.
>
> credit brought us in and credit will take us out.
>
> LOOK TO THE YIELD CURVE FOR ANSWERS PEOPLE! the banks will be profitable
> once again.
>
> they will top estimates going forward as the spread widens. highest
> since 1991 according to a recent bloomberg article. i like the sound
> of this and remember the last time the yield curve made news? it
> was june 2007 when it went inverted and oh yes 6 months later we
> were in a recession. look at its track record as a leading indicator
> if you are a skeptic.
Let me tell you about fair buddy.
Your government has done the following:
1. Voo doo accounting so we don't know the extent of the toxic assets on the books of these banks.
2. Total lack of clarity about their financial situations.
3. Projected mortgage defaults.
4. Projected credit card defaults.
5. Projected auto loan and auto lease defaults.
6. What type of credit default swaps these banks own.
7. What is this stress test??? What does it really mean??
I don't know about anybody else here, but I am scared SH*TLESS about the health of this industry and the trillions it will really take to stabilize it.
On May 03 12:57 PM LivingFractal wrote:
> How about an article that's neutral? This one is dripping with bias.
>
>
> How about some scenario models? Ex:
>
> - Citigroup is required to raise $10Bln, but this does not include
> the preferred stock conversion.
>
> - Citigroup is required to raise $10Bln, including the maximum preferred
> stock conversion.
>
> - Citigroup is required to raise nothing, and no stock conversion
> is required.
>
> - Citigroup is required to raise between 0 and $10Bln, without conversion.
>
>
> - Citigroup has $500 million more than they need, and no conversion
> is necessary.
>
> This article, written by someone with over a thousand sheep, er,
> I mean followers, is nothing more than a biased reprint of a chosen
> article written buy something who can't name their sources and whose
> writing is sub-par at best.
Bernanke and the politicians continue to rape the American public with their 4 lettered ponzi schemes...TARP TALF PPIP..this is lunacy. The Fed and treasury have gone far beyond what they should have done. Every special interest group and deadbeat has their hand out looking to be made whole by the free money bernanke keeps printing. Unfortunately, the clock is ticking and the day of reckoning is close at hand.
(Scroll up. He's the author of this article. Found this by accident, while helping out [up] a pal.)
Maybe SA needs a "tickler file"?
HardToLove
On Oct 05 09:06 PM Mayascribe wrote:
> SA did not take out every one of Tyler's articles. Or, maybe they
> are beginning to reinstate him?
>
> (Scroll up. He's the author of this article. Found this by accident,
> while helping out [up] a pal.)
HTL
On Oct 05 09:06 PM Mayascribe wrote:
> SA did not take out every one of Tyler's articles. Or, maybe they
> are beginning to reinstate him?
>
> (Scroll up. He's the author of this article. Found this by accident,
> while helping out [up] a pal.)