This is why you should short Citibank

Discussion in 'Stocks' started by Retired, Dec 14, 2007.

  1. Retired


    Undocumented residents being recruited for home loans by Citibank

    "The local program, which uses tax identification numbers instead of Social Security numbers, is similar to programs run by small lenders – and two state agencies – around the country that have distributed millions of dollars to undocumented immigrants over the past few years."

    "The local tax-ID program has kept a low profile – no Citibank or ACORN-issued news releases – because of the anti-immigrant backlash that the overall program has drawn. Citibank has processed 72 tax-ID loans nationally since October 2004, half in California."

    This article explains why Citibank is in so much shit right now. I bet this is what's in their massive SIVs -- loans that have no secondary market, too ugly to reveal, and sinking fast.
  2. So the illegal immigrant was helped by an organization called ACORN, which is funded by the federal government, to get a 5 percent 30 year fixed home loan?

    So not only is she an illegal alien, but she's also getting a lower-than-standard rate?

    This is a FUCKED UP situation.
  3. So that's why they brought them back onto the balance sheets? Because they're too ugly to reveal?

    Brining them back into house reveals their value and they float with the market (when that market gets going again).

    Granted a good portion may be shit, but they've been added to the balance sheet now and will be accounted for going forward.

    I guess some just don't get it.

    Good Luck!
  4. dsq


    "Citibank has processed 72 tax-ID loans nationally since October 2004, half in California"

    I dont understand 72 loans because i can tell you here in los angeles there are thousands of undoc residents who bought homes in the friends gardener got an arms loan for 600K and now is in doodoo and running around begging for money to pay his readjusted mortgage....that house could be had for 40k in iowa....The scary thing is the real estate market still hasnt tanked...MAybe 15% off the highs...i expect these 600k shoeboxes to be selling for 200k or less in 2010.
    If washington mutual stock has been slashed 66% and citi 40% i can only expect real estate to see the same.I think a mass panic is going to happen where prices just crash rapidly or 10k a month for 2-3 yrs....

    BTW,i walked into my wamu bank 2 weeks ago and the teller asked if i wanted a credit card!!!!!I was thinking are u crazy,no wonder this bank is in the chit hole-the stock that day was at 21$ 15$
  5. Retired


    Citigroup Inc. seems like it is caught in a never-ending game of whack-a-mole: The second the bank knocks down one problem, another pops up.

    On Friday, Moody's Investors Service downgraded Citigroup's long-term ratings, saying it expects continued losses related to mortgages and other complex securities. The action came a day after Citigroup resolved longstanding questions about troubled off-balance-sheet vehicles it sponsors.
  6. Citigroup: Morgan Stanley's Top Short Idea for 2008

    Morgan Stanley is out pitching Citi (NYSE:C) as their top short idea for 2008. Near-term, the announcement of Vikram Pandit as CEO as well as the Fed should be a plus for Citi. But looking to 2008, MSCO sees 3 reasons to be short: earnings are deteriorating, they expect new management to deliver a dividend cut, not a breakup, and they expect further hybrid issuance, diluting current shareholders. The firm does not believe the stock has bottomed out as it is trading above trough multiples: 18% above trough PEs, 24% above trough P/B and 48% above trough P/TB + Reserves.

    The firm has lowered their 2008 EPS From $4.01 to $3.55 due to higher losses against loans, CDOs, and SIVs, and due to slower top line growth in the IB and thinner net interest margins given wide LIBOR. They have lowered the forecasted dividend from 54c/quarter to 30c/quarter in 2Q08. MSCO is lowering their price target to $28 based on trough PE levels of 8.0x.
  7. Eventually, Citi should be a hell of a buy. But not right now. After the div cut and other disasters.
  8. This is a misleading article.

    Citigroup has been downgraded to AA-
    Still a VERY high rating.

    In contrast...
    New York State's rating is 2 notches lower at A

    New York State paper is riskier than Citigroup paper...
    And this is after months and months of media hysteria.
  9. It's always a great idea to "pitch" your direct competitors as "shorts"...
    Especially if you have the same problems on your balance sheet.

    But, of course, the irony is lost on everyone.
  10. Sounds like they're piling on. Why wouldn't they - the lower it goes, the bigger a position the pros can accumulate.
    #10     Dec 15, 2007