Word: citigroup
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...billion less than they were worth at the end of September. In the third quarter, BofA was forced to write down $4.4 billion in loans, or about 1.8% of its loan portfolio. Compared with what some of its competitors wrote down, that wasn't a heck of a lot; Citigroup, for instance, had a $13.2 billion charge in the same quarter, primarily related to loan losses. But the relatively small loss took BofA's thin tangible equity, the type of capital that matters most to shareholders, down to a ratio of just 2.6% of loans, according to FBR. By that...
...Regulators are split on what to do next. The Federal Deposit Insurance Corporation is backing a plan to create what it calls an aggregator bank, which would buy up the loans of BofA, Citigroup and the rest of our now troubled system, theoretically putting an end to the escalating losses eating away at the banks' capital. But if the government buys those assets at current market rates, banks would be forced to take immediate losses on the sales, doing more harm than if the government just left the troubled loans where they are. Sources say the Federal Reserve would prefer...
Washington policy makers seemed to be moving closer to expanding loan guarantee programs, which have already been offered to Citigroup and Bank of America, to other banks. But in both those cases, the loan guarantee strategy seems to have produced few positive results...
...late November, the government agreed in a deal struck over a weekend, to guarantee 90% of the losses on a pool of $300 billion in loans held by Citigroup. The government insurance was supposed to put the bank back on solid footing. At the time, a number of analysts said Citigroup needed as much as $300 billion in new capital to survive. The government thought insuring the loans, rather than the more costly and politically difficult path of just handing Citigroup money directly, would be enough to stabilize the bank. (Read "Why Your Bank Is Broke...
...hasn't. Instead, the plan seems to have done little to slow fears that Citigroup would have to be broken up or shut down completely. Indeed, the bank has since announced plans to sell off a number of units, including its brokerage division. On the Friday before the insurance plan was struck, Citigroup's stock, a key measure of investors' faith in the institution, stood at $3.77. This past Friday Citigroup's stock finished...