• jed-rakoff-21


    Appellate Court Willing to Entertain the Possibility that Citi Was Not Committing Fraud

    I’ve had some fun these last few days proposing counterintuitive theories for why Citi might not suck as much as you probably think it does and it’s nice to see others joining in the pastime, even if this sounds a little far-fetched:

    The district court’s logic appears to overlook the possibilities (i) that Citigroup might well not consent to settle on a basis that requires it to admit liability, (ii) that the S.E.C. might fail to win a judgment at trial, and (iii) that Citigroup perhaps did not mislead investors.

    That piece of rank conjecture is from the Second Circuit’s opinion on an appeal* of Judge Rakoff’s rejection of the settlement between the SEC and Citi over some mortgage-backed securities. Here’s DealBook:

    / Mar 15, 2012 at 7:27 PM
  • Banks, News

    BofA’s Success Looks a Bit Worse Than Citi’s Failure

    We’ve talked about the fact that Citi “failed” the Fed’s stress tests in the sense that its plan to return capital was Too Big, and so it got whacked by markets. Bank of America passed with flying colors, so, tiny yaaaaay, but the Journal puts that in context: The situation at Citigroup [what with the […]

    / Mar 15, 2012 at 4:06 PM
  • Vikula

    Banks, News

    Citi Will Try The Stress Test Again With A $9bn Stock Buyback

    More stress tests, bleargh. I guess the news is that Citi “failed”, though I can’t get all that excited by that because it didn’t exactly “fail” in the sense of now it’s being forced to raise capital / broken up / burned to the ground. Instead it failed assuming it follows the capital plan it submitted to the Fed, which is clearly a capital-lowering rather than capital-raising plan. I ballpark it at $10bn of share repurchases and dividends,* which is … well, it’s pretty big for Citi. So they can just not do that then. Or not do quite as much of that, which seems to be their plan:

    In light of the Federal Reserve’s actions, Citi will submit a revised Capital Plan to the Federal Reserve later this year, as required by the applicable regulations. The Federal Reserve advised Citi that it has no objection to our continuing the existing dividend levels on our preferred stock and our common stock, and we plan to do so, subject to approval by the Board of Directors each quarter. The Federal Reserve also advised that it has no objection to Citi redeeming certain series of outstanding trust preferred securities, as Citi proposed in its Capital Plan.

    We plan to engage further with the Federal Reserve to understand their new stress loss models. We strongly encourage the public release of these models and the associated benchmarks and assumptions. We believe greater transparency in this process will best serve all banking institutions and their shareholders as well as the international regulatory community and market participants, and will encourage a level playing field globally.

    There are at least two ha! moments in that snotty last paragraph. First there’s the fact that the Fed had planned to release the stress test results on Thursday and got gun-jumped by Jamie Dimon. So much for Fed transparency. But also, specifically, as people are all running around suing each other about the Fed maybe kind of encouraging bank CEOs to hide material information from investors, it is odd that the Fed would have the stress test results and sit on them for two days. Imagine the scenario where Jamie Dimon, Vikram Pandit, and the Fed all know that JPM passed and was going to do a largeish buyback, while Citi failed and was going to do a … I guess somewhat smaller buyback – and they didn’t tell anyone from today until Thursday. If you sold JPM to buy C today, wouldn’t you be kind of annoyed?**

    / Mar 13, 2012 at 6:51 PM
  • News

    Vikram Pandit Wants To Crowdsource Bank Risk Management

    A thing you might want is for investors to be able to understand the financial situation of the companies they invest in. Traditionally, that is a thing that many people want, anyway.* Much of our system of corporate finance is dedicated to that and it mostly works okay. A place where it breaks down a […]

    / Jan 11, 2012 at 2:07 PM
  • News

    Bonus Watch ’11: Citigroup

    Thinking you’d be getting a bonus this year? Think again, says the anonymous banker who spent the day bursting innocent financial services employees’ bubbles and asking young children “riddle me this” re: why they think anyone other than their parents would not only a) give rat’s ass that they went through the normal incidence of […]

    / Dec 7, 2011 at 2:58 PM
  • News

    Layoffs Watch ’11: Citi

    Cuts still going down at the House of Vikram.

    / Dec 6, 2011 at 3:03 PM
  • News

    Layoffs Watch ’11: Citi

    The previously mentioned cuts have continued to go down this morning.

    / Nov 30, 2011 at 12:18 PM
  • News

    Surely The SEC Is Sick Of Going To Court By Now?

    A lot of legal issues look like substantive things but are actually things about what institutions can and want to do. Obviously more people want to think about questions like “should the U.S. have universal health insurance?” than about questions like “does the Anti-Injunction Act bar lower federal courts from reviewing the individual mandate until […]

    / Nov 28, 2011 at 3:11 PM
  • News

    Federal Judge Wants To Know Why SEC Is Only Charging Citi 1/5th As Much As It Charged Goldman For Ripping Off CDO Investors

    If the SEC really wanted to reduce the chances of embarrassing itself, besides better Internet monitoring software it really ought to look into filing securities lawsuits outside of New York. Every bank is incorporated in Delaware and does all of its activities everywhere – surely they could find a CDO investor in California. But the […]

    / Oct 27, 2011 at 6:28 PM
  • Banks, News

    So Maybe Citi Created A Mortgage-Backed Security Filled With Loans They Knew Were Going To Fail So That They Could Sell It To A Client Who Wasn’t Aware That They Sabotaged It By Intentionally Picking The Misleadingly Rated Loans Most Likely To Be Defaulted Upon, So What?

    Citi today paid out some of its DVA gains to settle SEC charges that it sold investors a CDO-squared that facilitated its own naked CDS purchases on the underlying CDOs, while misleading investors into thinking that an independent collateral manager selected the underlying portfolio. If my grandmother reads Dealbreaker she’s now stopped. Anyway. I’m proud […]

    / Oct 19, 2011 at 2:16 PM
  • Banks

    Could Moody’s Saying BofA Is Not Too Big To Fail Make BofA Not Too Big To Fail?

    Michael Feroli at JPMorgan had an interesting note this morning (via ZH) on the Republican letter to Bernanke, pointing out that this sort of saber-rattling against easing might actually make it more likely as a way for the Fed to assert its independence. Moody’s downgrade of BAC/WFC/C, on the other hand, may have the opposite […]

    / Sep 21, 2011 at 2:39 PM
  • News

    Citi Summers Celebrate No Longer Being In Career Limbo

    “Citi rented out a yacht in the New York harbor the other night for interns who got offers. It was a four hour open bar with a DJ and let’s just say it got interesting at the end. There was limbo.”

    / Aug 3, 2011 at 1:36 PM
  • News

    Bonus Watch ’13: Vikram Pandit

    Uncle Vikula, who just started receiving a salary in January after choosing to make $1 a year until Citi turned a profit, may now be eligible for a very exciting three-part bonus.

    / May 18, 2011 at 6:47 PM
  • News

    Citi Employees Allegedly Kill Customer Over Bill Complaints

    Supposedly the three Citi officials were “angered” by the customer contesting his credit card bill.

    / Mar 31, 2011 at 12:42 PM
  • News

    Bonus Watch ’11: Citi To Pay Cash At Some Point In The Future

    Charlie Gasparino is hearing that senior bonuses at Citi this year will be paid out half in stock that vests in five years and half in cash that only 20 percent of which is immediately available (30% of the cash portion will supposedly be awarded in two years). For those who don’t know you’re supposed […]

    / Jan 31, 2011 at 4:20 PM
  • News

    Caption Contest Friday

    Vikram Pandit tests out the goods at Citi’s new branch, which the bank opened yesterday and celebrated with a red carpet and a waiter carrying ‘a platter of bite-size donuts and a sugary dipping sauce.’ [Dealbook via HNM]

    / Dec 17, 2010 at 10:33 AM
  • News

    Bonus Watch ’10: Citigroup

    No hard numbers for several weeks but one exec at the Big C thinks he’s picked up on some hints.

    / Dec 14, 2010 at 10:16 AM
  • News

    Vikram Pandit Was Complying With The Volcker Rule Before It Was A Rule

    With the passing of the Dodd-Frank Bill, one pesky thing that banks have had to spent a couple hours getting in line with is the Volcker Rule, and what it means for their proprietary trading desks. Whether to spin them off, send the employees to a farm in the country where they can run around, […]

    / Nov 22, 2010 at 11:38 AM
  • News

    Vikram Pandit Finally Understands What It’s Like To Be David Hasselhoff

    Here in the United States, David Hasselhoff is seen as the guy who gets drunk and eats cheeseburgers off the floor. To put it mildly, he doesn’t get much respect. Over in Germany, however, he’s the second coming of Christ and is treated like a prince. Until recently, Vikram Pandit never knew what it felt […]

    / Nov 11, 2010 at 10:49 AM
  • News

    Fire Chief Vikram Pandit Has Exciting News For Citi Employees And Shareholders

    As you know, Wednesday night was a big night for Uncle Vik. Despite the fact that Jay-Z was a no show, Pandito had a ball while being honored at a gala dinner benefiting the New York Police & Fire Widows’ & Children’s Benefit Fund. During the charity auction part of the evening, the Citi CEO […]

    / Nov 5, 2010 at 10:48 AM
  • News

    The Shattering Of A Vikram Pandit Dream

    Despite the fact that he is a rolly polly ball of smiles that had the good sense to sell his hedge fund to Citi for a billion dollars, as the CEO of the Treasury’s special needs child, Vikram Pandit does not have a lot to look forward to, other than the day he “makes more […]

    / Nov 4, 2010 at 1:08 PM
  • News

    Dick Bové: Citi Will Double In Two Years

    Also, Vikram Pandit has done “a fabulous job.”

    / Oct 18, 2010 at 5:04 PM
  • News

    Dick Bové Gives Citi’s Balance Sheet Two Thumbs Up

    To the haters: you’re living in the past! First of all Citigroup has..$180 billion in cash, and I believe they have another $60 billion in securities which are guaranteed by the US government, treasuries or agencies. So what we are talking about is roughly 11%, or one out of every $9 on Citigroup’s balance sheet […]

    / Sep 30, 2010 at 3:16 PM
  • News

    FYI, Vikram Pandit Chose Not To Take A Salary Of More Than $1, Again

    Earlier we mentioned that after getting his hopes up vis-a-vis earning more than a buck a year, the Citi board had decided its commander in chief would not get a raise from his current salary. Such is not the case.

    / Sep 24, 2010 at 6:06 PM
  • News

    Vikram Pandit To Remain $1 Man A While Longer

    The past couple years have been something of a kick the pants for Vikram Pandit and certainly not what he was expecting when he agreed to take on the role of Citi CEO in exchange for almost a billion dollars, plus the keys to his lemon, otherwise known as Old Lane. Previously a smiley, jolly […]

    / Sep 24, 2010 at 4:30 PM
  • News

    UBS Energy Team Defects To Warm Embrace Of Vikram Pandit?

    Apparently, yes. We’re told the “majority if not everyone” from the Houston energy office, headed by Stephen Trauber and said to be considered “the best division at UBS,” walked out last night and is headed for Citi.

    / Sep 15, 2010 at 9:30 AM

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