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View Full Version : CITI Bank to file for bankruptcy Friday???


tony hipchest
07-16-2009, 12:27 AM
once considered the strongest banking and financial institution in america, it looks like the giant cant rely on a second wave of bail outs.

CIT Talks Fall Apart, Bankruptcy Filing Likely Friday

http://www.cnbc.com/id/31926789

CIT Group, is likely to file for bankruptcy Friday, a source close to the company tells CNBC. The major lender to small-and mid-sized U.S. businesses had been surprised at the failure of bailout talks.

CIT is now pursuing a plan that is likely to include a chapter 11 filing on Friday.

"Discussions with government agencies have ceased," CIT said in a statement. "There is no appreciable likelihood of additional government support being provided over the near term."

The announcement followed last-ditch talks in which the Treasury Department had expressed concern about a worsening liquidity crunch at New York-based CIT, and indications that government aid would not put the lender on a path to recovery.

Treasury, in a later statement, said the government needed to keep the threshold high for exceptional aid to individual companies, adding that the United States had a powerful set of financing mechanisms to help restart overall credit markets.

Founded more than a century ago, CIT's problems mushroomed in recent years in the wake of Chief Executive Jeffrey Peek's decision to expand into potentially highly profitable but riskier areas such as subprime mortgages and student loans.

If it were to go bankrupt, it would join Lehman Brothers Holdings and Washington Mutual among large U.S. financial services companies to collapse since the credit crisis accelerated last September.

It would also show the possible limits of Washington's willingness to rescue companies, after multiple bailouts for much larger companies such as American International Group and Citigroup.

"At least in the eyes of the Fed and the eyes of the Treasury, we've turned the corner, such that the systemic kinds of risks facing the economy may be well past," said Mike Knebel, a portfolio manager at Ferguson Wellman Capital Management in Portland, Oregon, which recently sold CIT bonds.

CIT sought help even after it became a bank holding company in December so it could draw $2.33 billion of taxpayer money from the government's Troubled Asset Relief Program (TARP).

Treasury had been considering an aid package that included a temporary loan to give CIT room to strengthen its balance sheet by raising additional capital through debt or equity, a person familiar with the matter had said.

Other options had been access to Fed's discount window, as well as asset transfers, the person said. The person requested anonymity because the talks were private.

CIT's travails were a vexing problem for the Obama administration, which had proposed that Congress give the government the authority to unwind large, troubled financial firms in an orderly fashion.

Because regulators do not have that power yet, they had to decide whether to bail out a company whose collapse, while significant, would by itself likely not pose a "systemic" risk to the financial system.

Treasury has also been supportive of the Federal Deposit Insurance Corp granting CIT access to its government debt guarantee program, the person familiar said.

Asset transfers to CIT's banking unit would have required approval from regulators such as the FDIC, which is already heavy pressure to handle dozens if not hundreds of expected bank failures in the next couple of years.

The FDIC had also been reluctant to allow CIT to join other financial companies in issuing government-guaranteed debt under an existing program, believing that such options are designed for healthy institutions.

"Not all firms have to be saved and the government has to draw the line at some point," said James Barth, an economist at the Milken Institute.

"I don't think it's going to be a catastrophe or become another Lehman Brothers, given the FDIC's apparent concern about the quality of the assets."

An FDIC spokesman declined to comment.


While CIT has shed from some of its riskier businesses, it still faced too much debt, including some $10 billion coming due in the year ending March 31, 2010.

Barney Frank, chairman of the House Financial Services Committee, said earlier on Wednesday he hoped the government could come up with a structured aid package for CIT.

"If CIT doesn't get structured help, then it will have a very negative effect, I'm told, on small businesses around the country," he said in an interview with Reuters.


Indeed, industry groups such as the National Retail Federation had argued that CIT's tentacles extended too far throughout the country to allow failure.

Steve Bartlett, chief executive of the Financial Services Roundtable, said 10,000 small businesses could be choked off from needed funds if CIT were allowed to collapse.

"This one is crystal clear," Bartlett said in an interview.

whats that sound i hear? oh... its just republicans shedding tears for our bestest, most favoritest, ally and its esteemed prince (who took a 9% stake in the company several years back).

i sure hope 19 of 20 of their peeps dont attack us again, or we dont have to engage in another war to protect them.

we may wanna give this one second thought. :rolleyes:

on second thought, let em fail, and we will roll with the punches. either way is pretty much a no win situation.

Fire Haley
07-16-2009, 12:06 PM
More socialist "we only need one bank, one auto company, one power company"

One world government run amuck.


A Tale of Two Bailouts

Goldman's profits, CIT's trouble, and 'too big to fail.'

Yesterday saw one TARP recipient, Goldman Sachs, report $3.44 billion in profits even as another, CIT, teeters on the edge of either bankruptcy or another taxpayer bailout. Which way CIT will tip remained unclear as we went to press, but its very plight shows how the government's approach to systemic risk has created groups of financial "haves" and "have nots."

What the Goldmans of the world have in addition to profits is the widespread belief that they are too big to fail. Both Goldman and CIT converted into bank holding companies at the height of the financial panic last fall, which made them eligible for TARP injections. Goldman also benefited at a crucial moment from the Federal Reserve takeover of AIG, and it received the additional filip of FDIC-guaranteed debt issuance through the Temporary Liquidity Guarantee Program. CIT was excluded from the latter program on grounds that it didn't pose a systemic risk, even as larger competitors like General Electric were allowed in.

CIT's asset quality has since fallen further, and it now faces $2.7 billion in maturing debt this year that investors fear it will not be able to roll over. So it is seeking another taxpayer rescue, and officials at Treasury and Fed are sympathetic.

But if CIT -- a company one-tenth the size of Lehman Brothers -- can be bailed out long after the panic has passed, the word "systemic" has lost all meaning. CIT has long been a lender to subprime corporate borrowers, and this decade it took on even greater risks at precisely the wrong time. It has lost money for eight straight quarters. Its lending supports less than 1% of the total U.S. retail and manufacturing, and plenty of competitors could pick up its market share.

There's also a question of why the FDIC -- which is supposed to protect bank depositors -- should be the rescue agent. CIT's bank is only a small part of the company and is so far walled off from trouble. CIT executives want permission to stuff some of the company's assets into the bank so they can finance them with brokered deposits. But that would put the FDIC's deposit fund at greater risk just when it is stretched from other bank failures. The FDIC should also be winding down its debt guarantee program, not extending it to new and riskier companies. Taxpayers shouldn't be put at risk for further losses via the FDIC merely because Treasury and the Fed don't want to admit losses on their TARP investment.

Of course, if the feds do let CIT fail, this will only confirm that the only certain survivors in the current market are banks big enough that the government figures it must bail them out. Just ask the many small banks that have been rolled up by the FDIC at a rate of two a week since the beginning of the year, with eight so far in July alone. That can only strengthen the likes of Goldman, which apparently needs no help printing money anyway.

http://online.wsj.com/article/SB124762129423442667.html

revefsreleets
07-16-2009, 12:15 PM
Time to say buh-bye to Citibank. We knew this would happen...some companies just had too much toxic debt.

And, as far as another bailout...HELL! NO!

It's time to reel this spending frenzy back in...the government has made drunken sailors on shore leave look like Suze Ormond as of late.

fansince'76
07-16-2009, 12:24 PM
whats that sound i hear? oh... its just republicans shedding tears for our bestest, most favoritest, ally and its esteemed prince (who took a 9% stake in the company several years back).

i sure hope 19 of 20 of their peeps dont attack us again....

Oh, I'm sure the Savior will bow to his uncle in deference again and we'll be spared. Besides, isn't everyone supposed to love us now since he's in office and it's "cool" to be American again? :coffee:

Dino 6 Rings
07-16-2009, 12:29 PM
I buy fruit that is grown in the US, am I anti World or an immigrant hater?

Godfather
07-16-2009, 12:31 PM
Wow, that came out of nowhere.

I just consolidated my debts onto my Citi credit card. If they go bust I hope the money I owe disappears :laughing:

Fire Haley
07-16-2009, 12:40 PM
CIT is CIT group, NOT affiliated with Citibank

This is not Citicorp or Citibank (C), but rather CIT Group (CIT).

Completely unrelated entity. CIT is much smaller.

As usual, Tony has no idea what he's talking about - the topic headline is wrong.

SteelCityMan786
07-16-2009, 12:48 PM
Looks like the Mets need to try to sell naming rights..again.

Fire Haley
07-16-2009, 12:54 PM
see above

CIT is CIT group, NOT affiliated with Citibank

This is not Citicorp or Citibank (C), but rather CIT Group (CIT).

revefsreleets
07-16-2009, 12:59 PM
Oh, well than who gives a shit?

Constructive destruction...

steelreserve
07-16-2009, 01:02 PM
CIT is CIT group, NOT affiliated with Citibank

This is not Citicorp or Citibank (C), but rather CIT Group (CIT).

Completely unrelated entity. CIT is much smaller.

As usual, Tony has no idea what he's talking about - the topic headline is wrong.

Oh, come on, you can't sweat the details like that.


(I'm glad at least one other person was paying attention instead of rushing to say OMG)

Hammer67
07-16-2009, 01:03 PM
see above

CIT is CIT group, NOT affiliated with Citibank

This is not Citicorp or Citibank (C), but rather CIT Group (CIT).

I just finished reading the first post and was scratching my head over that. :laughing:

tony hipchest
07-16-2009, 08:51 PM
[B]

As usual, Tony has no idea what he's talking about - the topic headline is wrong.

awwww.... someone seems a little irritable today. :hug: the enforced portion in bold, posted twice, says it all.

citibank, citicorp, citi, citigroup, hell they change their name so often, who can keep up? (i believe they are officially citigroup now... maybe just citi)

anyone can (and did) simply mistake citigroup with cit group. hell, it even took a genius like you who always knows what he's talking about, several articles and a couple of posts (and im sure some heavy duty google research) to catch on.

so yeah, i was wrong in the title and wrong about the saudi stake in ownership. but i was definitely right about one thing.... gotta admit, you shed a few tears.

anyways, you found the mistake, so you get a prize. :party: (i didnt catch it, til i read another article today and saw cit's blue logo as opposed to citi's traditional umbrella red.)

Fire Haley
07-16-2009, 09:02 PM
so yeah, i was wrong in the title and wrong about the saudi stake in ownership

So in other words.........any good Mod would have banned you for lying for the cheap thrill of a headline.

I should be Mod for a Day.

I'll clean this pool up.

tony hipchest
07-16-2009, 10:14 PM
:crying01: ....the tissue is on the armoire.

Fire Haley
07-16-2009, 10:23 PM
You don't get it - do you.

Small business will be obliterated under Obama's socialized government.
.

U.S. small business funding dry, getting drier

NEW YORK (Reuters) - U.S. small businesses, already facing the toughest credit conditions since the 1980s, may soon find things are about to get tougher.

Concerns over the future of CIT Corp (CIT.N) -- a major lender to small businesses -- which provides capital in situations where many commercial banks fear to tread, makes small business advocates wary about the next few months.

Since small business is typically a major driver of the U.S. economy, any barrier to this sector's recovery could mean a longer, slower U.S. economic revival, and could limit the effectiveness of the government's stimulus dollars.

http://www.reuters.com/article/reutersEdge/idUSTRE56C5ZZ20090713

tony hipchest
07-16-2009, 10:45 PM
maybe you should start a thread crying for small businesses then.

i get it. i posted the damn article. you think CIT is the only place a small business can get a loan?

you guys are gonna cry if obama bails them out and you are gonna cry if he doesnt.

i get it.

:yawn: you know where the tissue is.

Fire Haley
07-16-2009, 11:19 PM
So, you are the corporation man now?

I get it, you got yours and screw the rest.

tony hipchest
07-16-2009, 11:27 PM
lol. i could always use a good janitor.

Fire Haley
07-16-2009, 11:32 PM
Good luck - try and find a Mexican these days - they are all gone - I can't even find any ditchdiggers.

tony hipchest
07-16-2009, 11:55 PM
Good luck - try and find a Mexican these days - they are all gone

:confused: i live in new mexico. i just looked at my daughter and found one. she even fixed us a plate of chips and salsa (i like to throw a chopped up habanero into a fresh jar of Pace).

regardless of race, you gotta love the lil' childrens :thumbsup: she has a little garden with 3 jalapeno plants that she has cultivated for the past 2 years.

last week i taught her how to make picco de gallo with her harvest.

it was yummy and she thought so too.

Fire Haley
07-17-2009, 12:13 AM
If I have to do man u al labor I'm blaming you.

MACH1
07-17-2009, 12:19 AM
Good luck - try and find a Mexican these days - they are all gone - I can't even find any ditchdiggers.

Come to Southern Idaho, I'll have ya a whole mess of em. :laughing:

Fire Haley
07-17-2009, 12:32 AM
I lived in Idaho for 10 years - I kilt my own elk in the Sawtooths without any help from the lettuce pickers.

http://i215.photobucket.com/albums/cc283/usagold/elk2.jpg

tony hipchest
07-17-2009, 12:54 AM
If I have to do man u al labor I'm blaming you.:laughing:

seriously...

if babys momma momma's name wasnt Manuela and i didnt have several "Manuels" in the extended family, this post wouldnt be nearly as hilarious... and true- (swear to God).

Fire Haley
07-17-2009, 12:58 AM
Well that does it - I''m moving to Panama....where you can still pick your choice of dancing girls for $3 for the night.

tony hipchest
07-17-2009, 01:01 AM
:wave: good luck with the elk down there.

Fire Haley
07-17-2009, 01:10 AM
I hunt different game these days...it's all good

http://www.stpetersburgtimes.com/2004/11/05/photos/gb-kingfish.jpg

MACH1
07-17-2009, 02:49 AM
Hmm, I see ya kilt a skin head in that elk pick.

Oh and nice tuna. :chuckle:

tony hipchest
07-17-2009, 11:04 AM
Citi reports profit after gain from Smith Barney

since they are obviously not going bankrupt (wrong co.) its nice to see them earning us a profit.

http://www.marketwatch.com/story/citi-reports-profit-after-gain-from-smith-barney?siteid=rss&rss=1

NEW YORK (MarketWatch) -- Citigroup Inc. reported a quarterly profit Friday after a huge one-time gain from a joint-venture deal at its Smith Barney brokerage, but absent that gain, business remained a tough slog as the firm's credit costs rose 81% to $12.4 billion.

Citi /quotes/comstock/13*!c/quotes/nls/c (C 3.07, +0.04, +1.32%) posted a second-quarter profit of $4.3 billion, or 49 cents a share, which includes an $11 billion pre-tax gain from its joint venture with Morgan Stanley on Smith Barney, which closed June 1. After tax, the company said the Smith Barney gain was $6.7 billion.

Citi provided no figure for what the firm's loss would be excluding the gain.

"Our institutional business has a strong client franchise. Our most significant challenge now remains consumer credit," Chief Executive Vikram Pandit said in a press release Friday. "Losses in our consumer businesses have been growing for some time, but we see some positive signs of moderation in those loss trends. Sustainable profitability remains our primary goal."

Analysts polled by Thomson Reuters had expected the company to lose 37 cents a share in the quarter.

Revenue in the quarter was $30 billion.

The company lost $2.5 billion, or 55 cents a share, in the second quarter last year.

Citi shares rose 3.3% in early trade.

The bank said its total credit costs in the second quarter rose to $12.4 billion, including a $3.9 billion addition to loan loss reserves. The bank said its total allowance for loan losses now stands at 5.6% of total loans.

Citi has been supported with billions of dollars of government money in the past year as the company suffered massive losses triggered by the financial crisis and lingering recession. The government will soon own roughly a third of the bank.

Later this year when the bank completes a preferred share exchange with the U.S. government, taxpayers will own more than 35% of Citi.

Citi has faced management turmoil over the years, but this has increased recently as the bank has been put under pressure by some of its regulators, notably the Federal Deposit Insurance Corp. See full story.

Regarding its financial stability, the bank said that its Tier 1 capital ratio, a key measure of a bank's reserve levels, rose to about 12.7% in the second quarter, compared to 8.7% in the second quarter of 2008 and 11.9% in the first quarter of 2009.

Tangible common equity, another gauge of a company's financial strength based on the amount of stock it has, grew by $9.1 billion during the quarter. Citigroup and other banks hurt by bad loans over several years, and the resulting credit crunch, have been required by the government to boost capital levels during the second quarter.

The report for the first time broke out the separate operations of Citicorp, the traditional banking business, and Citi Holdings, the new unit formed to hold and run off the toxic mortgage and derivatives assets the bank accumulated during the last several years.

Results fell at Citicorp as consumers continue to languish amid spiking unemployment and falling home prices. Revenue and profit both fell 11% at Citicorp, to $15 billion and $3.1 billion, respectively.

"Citicorp is our core franchise and will be the source of Citi's long term profitability and growth," Pandit said.

Total staffing at Citi fell by about 30,000 jobs in the second quarter, to 279,000.

The company said the decrease was mainly driven by its joint-venture transaction with Morgan Stanley at its Smith Barney brokerage unit.

"Headcount is now approximately 96,000 below peak levels. June was the 20th consecutive month of headcount decline," the firm said in a press release unveiling second-quarter earnings on Friday.


so, have you guys decided yet who nationalized the banks? :willy:

was it that socialist bush? :laughing:

they shattered expected earnings reports but still losing jobs. funny though, i didnt realize its already 20 months since obama's been in office. :chuckle:

oh well. consolidation and mergers = cost savings or else companies wouldnt do it (regardless of whos prez).

steelreserve
07-17-2009, 11:48 AM
they shattered expected earnings reports but still losing jobs. funny though, i didnt realize its already 20 months since obama's been in office. :chuckle:

oh well. consolidation and mergers = cost savings or else companies wouldnt do it (regardless of whos prez).

But ... but ... I thought that when it's those good-for-nothing white-collar bankers who lose their jobs, it serves them right. I was told we should just fire all the executives anyway. I thought I was supposed to look down on anyone who doesn't have a blue-collar job or do some kind of social work.

Also, OMG, Bush and his oil buddies!

revefsreleets
07-17-2009, 12:48 PM
"The company said the decrease was mainly driven by its joint-venture transaction with Morgan Stanley at its Smith Barney brokerage unit."

Um...asked and answered.

Bu-bu-bu-Bush AGAIN? Really?

EESA saved most of these banks...that was before Obama.