Michael Shulman

How Did Citigroup End Up in Crisis?

You confine your analysis to the balance sheet -- an Citi has more than $1.2 trillion in off balance sheet assets as shown in their town hall presentation last Monday - it is available on their website -- page 21 -- and even they admit several hundred billion, perhaps more than $600 billion, could end up on their balance sheet. The government intervention today pays no heed to these assets. Using current mark downs or historical default rates, these assets would and could overwhelm Citi. You notice the stock cracked after the meeting. The first hint of of the VIEs was in an obscure SEC filing in February and I have been following them ever since. With all de respect, an analysis of Citi or other banks without looking at off balance sheet obligations is worthless or worse.

Michael Shulman
ChangeWave Shorts
ChangeWave.com