1977°C

Citigroup's Derivatives Reduce Bailout to a Non-Event

I think C is a great stock in general as it is too big to fail, the deivative book you mention has no meaning as all this trillions are not valued the same as options/future are valued at the exchanges and this OTC are not cleared by the day or delivery.
This are mostly swaps (loans) linked to long dated treasuries, so 37 trillion USD are not 37 trillion, this is the amount that they serve, so if 10% of those loans will fail it will wipe out 3.7 trillion $ in like 20-30 years or 123 billion $ a year.Now think about deposits that will be transfered from other banks to C and then think again if it is possible for 10% of loans to fail - of course not as each loan after short period of non performance is called back and banks liquidate remaining assets making their biggest buck on it.
I don't say that there is no risk on the banks balance sheet, there is risk but it is managable risk long term and for now banks get help from the government.In the long run (20-30 years) this crash will lok like an opportunity of a lifetime, but as exact low point to buy bank stocks is not known one must be selective and wait.
I would love to go long anything if DJIA will reach at some time in the future 2000-3000.

Year-End Buyouts: Big Challenges for the Big Banks

The big banks that had to fail already did so, year 2009 will be part II of year 2008 only with one major difference, the banks that remained will start to gain market share from the ones that left.This is natural process and it takes time it doesn't mean that bank stocks will rise at all, it only means that there is place to fill the demand gap as demand for banking didn't disappear with the banks that went bust.
This demand for banking overall will make rising revenues ( I had 4 bank accounts last year, now only 1 as I was not sure if other 3 banks will remain so this 1 bank gets 2-3 times more money from me for the services I used before with 4 banks) and even rising profits.
I would not invest now in most banks but one I think will be taken over soon Fifth Third Bancorp (NasdaqGS: FITB) and I am watching carefully.