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Fed rejection a shock to Citi

  • "Surprise would be an understatement," says one Citigroup (C -5.5%) executive when the top brass learned - 24 hours ahead of the markets - of the Fed rejecting the bank's capital return plan. Traveling on business in Korea, CEO Michael Corbat - who was on the conference call when the Fed relayed its decision - cut his trip short to get back to NYC for a board meeting. Following the meeting, he sat down with FRBNY boss Bill Dudley.
  • "It's too early ... why are you returning capital when you need it," is the message the Fed is trying to get across, according to a source, who adds the central bank looks like it wants Citi to continue selling off noncore operations.
  • Will heads roll? “Since becoming CEO, I have spoken with many of you about the need to hold ourselves accountable for what takes place at our firm," said Corbat in a staff memo today. "I am accountable for getting this right.”
Comments (24)
  • Stone Fox Capital
    , contributor
    Comments (5756) | Send Message
     
    think if C hit its numbers, heads shouldn't roll. Is the bank going to be better off having a new CFO that takes a year to learn the ropes? Don't want a bank that reacts to the FED decision, but one that creates a credible plan and sticks to it regardless of the FED. Who thinks the FED is right anyway?
    27 Mar, 03:17 PM Reply Like
  • optionsexpert
    , contributor
    Comments (279) | Send Message
     
    The FED is ridiculous for turning this down. The FED is a joke.
    27 Mar, 05:28 PM Reply Like
  • MarketLost
    , contributor
    Comments (808) | Send Message
     
    I wish the Fed did this before the melt-down, don't you?
    27 Mar, 11:59 PM Reply Like
  • doubleguns
    , contributor
    Comments (7874) | Send Message
     
    I would prefer not to have to bail them out again. Fed must know something is afloat in the deep waters that they will need this money for.
    27 Mar, 06:12 PM Reply Like
  • Uncle Pie
    , contributor
    Comments (2665) | Send Message
     
    they can't return capital because they've got no capital to return.
    27 Mar, 06:25 PM Reply Like
  • MarketLost
    , contributor
    Comments (808) | Send Message
     
    Exactly.
    28 Mar, 12:00 AM Reply Like
  • MisterJ
    , contributor
    Comments (580) | Send Message
     
    No more TBTF gamblings - heads I win, tails you taxpayers lose and bail me out. A lesson they had to learn in the Citi.
    27 Mar, 07:45 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8135) | Send Message
     
    I wish the people claiming Citi is insolvent or hiding "something" would provide some proof.
    27 Mar, 08:14 PM Reply Like
  • june1234
    , contributor
    Comments (2492) | Send Message
     
    Wonder how much exposure they have to the $1.2 quadrillion derivatives market an amount equal to about 20 times the size of the world economy, or the unregulated underfunded multi $$trillion CDS markets ?
    28 Mar, 06:34 AM Reply Like
  • doubleguns
    , contributor
    Comments (7874) | Send Message
     
    That shall remain buried from sight out in the very deep water.
    28 Mar, 01:48 PM Reply Like
  • psychological-dividends
    , contributor
    Comments (561) | Send Message
     
    How is the Fed a joke? I think Citigroup is a joke.
    27 Mar, 09:16 PM Reply Like
  • David at Imperial Beach
    , contributor
    Comments (3187) | Send Message
     
    The whole thing is a game of Monopoly. The Fed's in charge of making sure that when the next financial polar vortex arrives that Boardwalk and Park Place stay in American hands. Citi got caught mortgaging them for more than their appraised value again.
    28 Mar, 02:20 AM Reply Like
  • optionsexpert
    , contributor
    Comments (279) | Send Message
     
    No one cares what you think.
    28 Mar, 06:21 AM Reply Like
  • The Long Tail of Finance
    , contributor
    Comments (695) | Send Message
     
    Too big to manage. No one I know who's worked for Citi ever really enjoyed it.
    27 Mar, 09:47 PM Reply Like
  • kbabdb
    , contributor
    Comments (5) | Send Message
     
    Hopefully since they think they have some extra bucks in their pocket and the feds won't let them disperse it they will do a larger buy back and bigger dividend in a couple quarters....if they don't give it away in bonuses.
    28 Mar, 03:47 AM Reply Like
  • Jake Huneycutt
    , contributor
    Comments (1353) | Send Message
     
    The biggest thing I've learned from analyzing banks over the past few years: Federal regulators are extremely arbitrary. Politics drives the banks more than most of us care to realize.

     

    The idea that C is "insolvent" or even "in trouble" is completely ludicrous. The same Federal regulators that did nothing prior to the financial crisis, are now trying to compensate, by taking the extreme opposite position now.
    28 Mar, 05:20 AM Reply Like
  • Go Double Dutch
    , contributor
    Comments (2) | Send Message
     
    I'm wondering if we as investors can get the full explanation behind this decision.
    28 Mar, 05:56 AM Reply Like
  • Go Double Dutch
    , contributor
    Comments (2) | Send Message
     
    I'm wondering if we as investors can get the full explanation behind this decision.
    28 Mar, 05:56 AM Reply Like
  • Patent News
    , contributor
    Comments (1312) | Send Message
     
    Citi CEO should take the fall and need someone quicker to notice what went on and will go on!!
    28 Mar, 08:22 AM Reply Like
  • Chancer
    , contributor
    Comments (2520) | Send Message
     
    I think this is inexcusable for Corbat and C.

     

    Numbers are more difficult. Control should be much easier. And the Fed told C about this previously. How can that be a surprise?

     

    Insiders say that C is really poorly run.
    28 Mar, 08:53 AM Reply Like
  • Tom Sr
    , contributor
    Comments (184) | Send Message
     
    Inexcusable - absolutely.
    Control in a very large Company can be very tough though. They obviously have not done nearly enough. Perhaps too much focus on "the numbers" but someone didn't listen enough.
    28 Mar, 09:32 AM Reply Like
  • TFCAB
    , contributor
    Comments (1942) | Send Message
     
    Prediction - CFO will decide to spend more time with the family by May 15
    28 Mar, 09:06 AM Reply Like
  • Tom Sr
    , contributor
    Comments (184) | Send Message
     
    I certainly hope so. Failing as inexcusable.
    28 Mar, 09:29 AM Reply Like
  • chia
    , contributor
    Comments (3) | Send Message
     
    The Fed has it's planning. All Asian & Latin America stocks will drop more than 50% this coming May. Another great annual celebration for Fed on these countries.
    28 Mar, 12:19 PM Reply Like
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