Citigroup failure in Fed test raises questions

Citigroup failure in Fed test raises questions
By David Henry
Wed Mar 14, 2012 6:43pm EDT

(Reuters) - Citigroup Inc (C.N) on Wednesday stood by its pledge to reward shareholders, as Wall Street sought to understand why the bank failed to win approval from regulators to increase its dividend or buy back stock.

Citigroup said late on Tuesday the Federal Reserve turned down its plan to return capital to shareholders, following the latest stress test of top U.S. banks.

In the weeks leading up to the announcement, Chief Executive Officer Vikram Pandit had convinced analysts the bank had rebuilt its balance sheet to the point it had more capital than needed to weather a severe economic downturn. By late last week, several analysts had forecast the bank would win permission to raise its quarterly dividend from a penny a share to 10 cents.

Surprised investors sent Citigroup shares down 3.4 percent on Wednesday, while the KBW Index of bank stocks gained 1.3 percent. The stock rose more than 30 percent this year.

http://www.reuters.com/article/2012/03/14/us-citi-fed-idUSBRE82D1FG20120314

REPEAT after me ; all Roads lead to Citibank

Once again as I have repeated many times on this blog that in almost every financial crisis since the 1970's all roads lead to Citibank and with the combo or a very oversold market ,some very unexpected positive news from Citi bank and an increase in auto sales in China ,coupled with no major faux pas from the new administration and the market rejoiced . The key here is follow through accompanied with significant volume building !

Citi’s salvation signals the midpoint in this crisis

As I said previously my bet would be that Citi’s salvation signals the midpoint in this crisis. Don’t break out the Champaign just yet as one analysis Meredith Whitney keeps reminding us Citi as well as many other banks suffer from the “junk in the trunk” syndrome and these bad assets are systemic and slow to heel. On the bright side the recent resolution for Citi seems far more satisfying than the previous alternatives of Bear Stearns and Lehman Brothers.

At this point weak economic data is looking more and more like its being priced into the market and it appears that for the moment many stocks have already made there lows ,yet it would not surprise me to see the market as a whole make some lower lows. Long term investors have begun to pick up equities and fixed income predicated on the idea that yield equals good values and if not at lest you are getting paid to wait and wait and wait....Some of the large scale institutional barging hunters are becoming ever more active and even starting to compete for controlling stakes in various entities with each other .Some of the more recent data though far from benign has come in not nearly as bad as many had come to expect. It appears at the moment that the end of the world has been forestalled to yet another day.

Citi Never Sleeps ...snore

As I have said many times all financial crises in recent generations seem to begin and end with Citibank. Weather it’s the late 1970’s with the Latin America banking crisis or the Early 90’s financial melt down all roads as they say lead to Citibank. It seems when Citibank stocks goes below $10 the end of the crisis may be at hand. It was that way in the early 90’s when the same pattern as now brought several major investments from a white night or should I say a Saudi Prince and some additional help from Uncle Sam. No mea culpa was forth coming from Citi as none will be now. The bank was propped up by a combination of government aid and outside investors. Then as now no great proclamations were made, no show trials were had and no politicians patted then selves on the back. The fix was in and the financial system began to resurrect its self. Let’s hope that once again the recent bailout of Citi signals the same.

Fannie and Freddie may be forced in to receivership, yikes!

Fannie and Freddie may be forced in to receivership, yikes! Perhaps we all should have paid more heed to the warnings of the previous FED Chair as he pinned over how much on the hook the Treasury could be with its implied guarantee’s .Perhaps this is the climatic event that from which my past experience signals the end of the crisis and the beginning of a rebound in financials. I had long surmised that this current crisis would end with some major bank teetering on the edge of disaster. My regular readers will remember several times I pointed out that in financial crises of the later half of the 20th century all roads led to Citi bank but a crash and burn act from Fannie and Freddie might just do the trick .Apparently it would be an understatement to say that things are a bit worse than even the most negative commentator has led us to believe! Folks I am not ready to say buy yet but as Baron Rothschild once said,” buy when there is blood in the streets” and at this moment it’s starting to look pretty gory.

Citi bank Picks Up John Reed...waspbuzzzzz

Looking for a bottom or near bottom in banking Citi bank always the fountain head of every banking crisis, has just picked up John Reed as an advisor. Folks start the count down.Don’t underestimate the John Reed Factor.

the Citi never sleeps part 2

Things are so bad at Citi bank that Prince Alwaleed the largest share holder invited Sandy Weill to met the Prince in Riyadh