Aryana

Citi: Off the Banking Reservation

The good news is that Pandit is staying and Rubin is leaving, and the merger of MS and SB. The sooner you cut your losses the better your chances of survival and Pandit is prescient enough to take the opening gambit. He is also lucky that WFC out bid him in his quest for Wachovia -a bank with substantial toxic waste acquired from the acquisition of World Savings(the master of Option ARMS)- lest he would have increased the radioactive half life of Citi's liabilities, making it even more difficult for Citigroups turnaround. Jettisoning the culprits is a good gambit and Rubin resignation was an excellent choice in that it manifested that Citi means business and there are no ands, ifs or buts on their glide path back to being the leading US bank interrnationally. At least Citi has begun exterpating its toxic assets and retiring those directors that played a major role in its contamination. Being the only major bank to acquire guarantees from Uncle Sam - a loss-sharing agreement in place covering $306 billion of its loans and securties - definately gives it an edge if the economy continues to go into a whirlwind. A failure of Citi would have far reaching ramifications that would hurt the dollar and subsequently the average American. Pandit and company have prepared Citi by fortifying the ramparts for a worse case economic onslaught, however I do not believe the world is coming to an end nor do I believe any nation on earth is even close to toppling the mighty dollar, at least for another 20+ years. Until the housing market stabalizes, which I don't expect until the spring of 2010, we should not expect too much growth. All we should expect is cutting back on losses and minimizing expenses and this is exactly what is on the menu de fare at Pandit's Citigroup.