Pooch

Estimating the Risk in Citigroup Stock and Bonds

Dckleins has made the only rational comments in this thread. There is little way that even Citi has the ability to model what the losses will be in the future. They can/will write down based on generally accepted models for assessing value, but to a certain extent are witnesses to the delinquency numbers. As well, Citi was most certainly left holding the bag on loans that they wanted to sell. There was a high margin marketplace set up by the major players, and the risky game of musical chairs was a costly one for Citi and others. The interesting thing is that Citi's residential mortgage unit is (and always has been) very conservative. The home equity unit and newly purchased Argent (now Citi Residential) are not included in that mix...but any losses absorbed by Citi will be related to the SIVs purchased from other lenders (New Century, American Home, etc.). I would assume that Q4 07 will be the worst, but other losses will be posted in future quarters. If Citi is able to absorb those losses and see the trend turning around, investors will come back. There will be a time when this is behind us...the key is passing the big kidney stone, and doing that without divesting other profit centers will only help Citi in the future.