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Citi's "Earnings:" A One Time $2.5B Profit In Derivatives

By Big Tent Democrat, Section Economy
Posted on Fri Apr 17, 2009 at 12:07:04 PM EST
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Boy, how could that have happened?:

Citigroup, the battered banking giant, announced a first-quarter net profit on Friday after more than a year of staggering losses and three bailouts from Washington. The New York-based bank reported first-quarter net income of $1.6 billion, after a loss of $5.11 billion in the period a year earlier. It announced a loss, however, of 18 cents a share, because of changes in its stock structure. The results were also helped by an accounting adjustment that allowed the bank to post a one-off gain of $2.5 billion on its derivative positions.

(Emphasis supplied.) Can you spell A-I-G?

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    Citi's "Earnings:" A One Time $2.5B Profit In Derivatives | 75 comments (75 topical)

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    Time for a rewrite... (5.00 / 4) (#1)
    by kdog on Fri Apr 17, 2009 at 12:15:49 PM EST
    of the "lies, damn lies, and statistics" line...sub earning reports for statistics.

    I got a letter from Publishers Clearing House, I may have won a million bucks, I think I'll put that million on my earnings report so I can get a loan on a Bentley....apparently there are no rules against this type of thing:)

    I don't get it (5.00 / 2) (#29)
    by NYShooter on Fri Apr 17, 2009 at 02:00:26 PM EST
    Why can't the Obama Administration just come clean with us? Get it all out; at least all that they know so far. All this crap about quarterly "profits," "glimmers of light," "decline slowing down," yadda, yadda. Everything's Rosy!

    It's our money; are they afraid we might panic if they spilled their guts? My Lord, they've already committed upwards of ten Trillion taxpayer dollars, and we haven't committed mass suicide yet.

    Goldman Sachs reports a profit, forgetting to tell us accounting changes eliminated a losing month which would have wiped out the profit. Big deal; lying to us is apt to cause a lot more panic than just telling us the unvarnished truth.

    The contempt this Pol in the White House has for the electorate is just mind boggling!


    Parent

    The Obama administration doesn't (4.00 / 2) (#34)
    by Green26 on Fri Apr 17, 2009 at 02:24:18 PM EST
    control all of this. Much of this is from companies and the media.

    What do you think they haven't come clean on?

    One thing that might help is if more people just read and considered what is being put out and weren't so incredibly suspicious of everything.

    Parent

    According to green26 (none / 0) (#70)
    by reslez on Sat Apr 18, 2009 at 08:44:14 AM EST
    we just have to clap harder.

    Sorry, the banks who are sponging up trillions of our dollars are not worthy of trust. They binged on fraudulent housing loans for years, racked up billions in illusory profits and scandalous bonuses all the while assuring us the good times were on. Now we see how hollow those words were.  We are correct to view their claims with suspicion, even skepticism.

    So. If you have a choice between believing the people who were right all along, or the ones who were wrong for years and now desperately want our money, whom do you pick?

    Parent

    Have I missed something or (none / 0) (#71)
    by BackFromOhio on Sat Apr 18, 2009 at 01:01:54 PM EST
    could it be that the Obama admin is panicking that the continued bad news has been creating bad news and thought this stuff would bring some confidence back to the economy and get people to start spending/lending again?

    Parent
    I see the contempt... (none / 0) (#30)
    by kdog on Fri Apr 17, 2009 at 02:03:07 PM EST
    from the WH on down to the lowliest of House Reps.  

    They're f*ckin' in, we're f*ckin out.  

    Parent

    At some point (none / 0) (#33)
    by NYShooter on Fri Apr 17, 2009 at 02:08:12 PM EST
    this guy has to be told....The campaign's over!!

    You got a country to run!!

    Parent

    He's busy in the Caribbean. (none / 0) (#54)
    by oculus on Fri Apr 17, 2009 at 04:33:38 PM EST


    Parent
    There's a tell the truth (none / 0) (#69)
    by Militarytracy on Sat Apr 18, 2009 at 08:16:15 AM EST
    t-shirt in here somewhere...

    they've already committed upwards of ten Trillion taxpayer dollars, and we haven't committed mass suicide yet

    Parent

    No (5.00 / 1) (#3)
    by jbindc on Fri Apr 17, 2009 at 12:25:08 PM EST
    But I can spell B-A-S-T-A-R-D-S

    Alice in Wonderland (none / 0) (#5)
    by SOS on Fri Apr 17, 2009 at 12:32:00 PM EST
    I can't think of any other honest explanation.

    Parent
    I suppose if Britain survived (5.00 / 3) (#4)
    by SOS on Fri Apr 17, 2009 at 12:26:34 PM EST
    being bombed by the Third Reich maybe there's a chance we might survive being bombed with bullsh*t by our own media.

    The $2.5B is not from AIG, but it's crazy anyway: (5.00 / 1) (#6)
    by steviez314 on Fri Apr 17, 2009 at 12:32:36 PM EST
    Citi's $1.6 billion profit based on $2.5 billion accounting trick

    What accounting trick? I could not believe my eyes when I read it but it turns out that Citi was able to take to a $2.5 billion gain on a rule that lets it record any declines in the market value of its debt as an unrealized gain. The rule, which Citi adopted in 2007, reflects the possibility that a company could buy back its own debt at a discount, which under traditional accounting methods would result in a profit. But Citi didn't do that -- this has to be some kind of an error.
    Maybe they can do a show (5.00 / 1) (#7)
    by SOS on Fri Apr 17, 2009 at 12:40:34 PM EST
    on TV . . Finance's Biggest Secrets Finally Revealed.

    Parent
    Problem is that it wouldn't help (none / 0) (#42)
    by inclusiveheart on Fri Apr 17, 2009 at 02:42:17 PM EST
    the likes of us.  Just try writing a huge numer in your check register.  The banks will still bounce your checks if they exceed the amount they calculate that you actually have.

    Parent
    Two Major Points Here, I Think... (5.00 / 1) (#8)
    by santarita on Fri Apr 17, 2009 at 12:50:03 PM EST
    One is that one quarter does not a trend make.  There are too many opportunities for one time charges, accounting impacts, etc to see a trend.  

    The second is that the collapse of AIG would have had systemic negative effects.  The Fed and Treasury set up the loan and capital infusion to prevent the cascading collapse of many institutions, including Citi.  The fact that Citi benefitted from part of that $50 bn payoff of counterparties is only bothersome if Citi got more than it should have.  And that would be bothersome because it might show governmental favoritism and/or an indirect government subsidy.  If it is an indirect subsidy then it should be added to the Citi bailout price tag.

    A minor point is that the good news is that Citi didn't report a loss.

    Parent

    Thanks for posting that Stevie (none / 0) (#11)
    by Catch 22 on Fri Apr 17, 2009 at 01:08:53 PM EST
    I was just going to post a similar article. I can't believe how people jump all over AIG as being the cause of the 2.5 billion when a one google search would have shot that hopeful theory down.

    Of course that would have been good news here if it were true and the actual First Quarter Revenues of $24.8 Billion would be bad news. Doomsday'ers.

    Revenues also included (all reflected in Schedule B): A net $2.5 billion positive CVA (credit value adjustment ) on derivative positions, excluding monolines, mainly due to the widening of Citi's CDS spreads



    Parent
    Hmm (none / 0) (#18)
    by Big Tent Democrat on Fri Apr 17, 2009 at 01:33:41 PM EST
    I do not see how that is a "derivatives" issue. Explain it to me?

    Parent
    From Time Magaizine's article about this: (none / 0) (#21)
    by steviez314 on Fri Apr 17, 2009 at 01:42:31 PM EST
    Citi's overall investment banking earnings were boosted by a $2.5 billion derivatives valuation adjustment "mainly due to the widening of Citi's CDS spreads." In somewhat dumbed-down but still utterly flummoxing language: Credit default swap (CDS) spreads represent the cost of insuring against Citi's default. That cost went up in the quarter as investors fretted about Citi's solvency, so Citi was able to book $2.5 billion in gains.

    Just like banks have to mark to market some of their assets, they are allowed to mark to market some of their debt, which I guess includes an imputed debt mark based on where the CDSs are trading.

    Parent

    So, the cost of insurance is gains? (5.00 / 2) (#26)
    by nycstray on Fri Apr 17, 2009 at 01:50:32 PM EST
    Debt is gains? Default is profit? Down is up?

    yes, I'm utterly lost trying to read that, lol!~

    Parent

    I know if a company issues debt for $100 (5.00 / 1) (#27)
    by steviez314 on Fri Apr 17, 2009 at 01:56:59 PM EST
    and buys it back at $60, they must show a "profit" of $40 on the transaction.  Just like if they bought an asset for $100 and sold it for $60, they would take a $40 loss.

    Mark to market accounting rules also let them show the $40 profit, if the market value of their debt is $60, even if they don't buy it back.  Many banks showed profits like that in the 4th quarter of 2008.  Of course, if the market value of their debt goes back up, they have to reverse out that profit.

    I leave it to the accountants here to know the rule that seems to let a wider credit default spread, which implies a lower debt market price, also do the same thing.

    Parent

    That's how it works (none / 0) (#31)
    by Steve M on Fri Apr 17, 2009 at 02:03:30 PM EST
    but I don't get how you can mark something to market when you don't own it!  If I owe you $100, and there's doubts about my creditworthiness so you could only get $80 for my debt in the open market, then fine, you can report it as an $80 asset marked to market.  But from my perspective, unless and until I retire the debt (and it's a funny world where I get to buy my own $100 debt for $80, when you think about it), I still owe $100, plain and simple!  But common sense has little to do with it.

    Parent
    The flip side to that is why should I mark (none / 0) (#32)
    by steviez314 on Fri Apr 17, 2009 at 02:06:53 PM EST
    down an asset to market if I don't have to sell it.

    That's accrual accounting for you.  If I HAD to sell an asset, what would I get for it, and if I HAD to buy back a liability, what would I pay.

    I guess both sides of the balance sheet should be treated the same.

    Parent

    Can you buy back the debt? (none / 0) (#36)
    by Big Tent Democrat on Fri Apr 17, 2009 at 02:30:55 PM EST
    The difference in my common sense thinking is the asset you have really is worth less.

    Your debt obligations have not changed just because they are trading at a lower value in a secondary market. If Citi bought its debt, yes, they would realize a gain.

    But they CAN'T buy it back because they do not have the money to do it.

    I mean if they could, they would right?

    Parent

    It doesn't matter if you can or cannot buy back (5.00 / 1) (#40)
    by steviez314 on Fri Apr 17, 2009 at 02:38:29 PM EST
    the debt, just like it doesn't matter if you have to or not have to sell the asset.

    It's just accrual accounting.  I can see the rationale behind treating both sides of the balance sheet the same way, for accrual purposes.

    Parent

    Somehow (none / 0) (#45)
    by waldenpond on Fri Apr 17, 2009 at 02:53:28 PM EST
    They are allowed to do many counter-intuitive things and have so many loop holes.  Is it as simple as needing cash?  Could they 'borrow' from each other to buy back?  Are they restricted in which assets they can apply the 'new' debt against, are there any restrictions to writing the 'new' liability up against other liabilities?  I have no idea, but I imagine if there is a way to, they will find it.

    Parent
    Well (none / 0) (#47)
    by Steve M on Fri Apr 17, 2009 at 03:05:28 PM EST
    Bear in mind that it can only be so pernicious, since it's all being done out in the open.  Any sophisticated investor knows that the $2.5B is phantom profit to a certain extent.  It's the gimmicks that aren't openly advertised that you need to worry about.

    Parent
    Precisely. n/t (none / 0) (#50)
    by santarita on Fri Apr 17, 2009 at 03:18:11 PM EST


    Parent
    Huh? (none / 0) (#25)
    by Big Tent Democrat on Fri Apr 17, 2009 at 01:45:26 PM EST


    Parent
    Weren't the CDS (none / 0) (#46)
    by waldenpond on Fri Apr 17, 2009 at 03:04:15 PM EST
    always a liability?  They booked them as an asset expecting the gain on the failure of the underlying asset.

    [A financial trans-action in which the holder of a debt instrument pays a premium for protection from a loss in the case of default. This may be accomplished by purchasing an option or credit insurance, rather than a true swap. All of the credit risk can be transferred by using a total return swap.]

    For me, this betting on expected failure was a ponzi scheme.  If you can stay in front of it, it's an asset, if you are behind it.. a loss.  It seems everyone expected failure and were just trying to stay in front of the swap and stiff someone else with the bill.


    Parent

    Does anyone know if this (none / 0) (#55)
    by Green26 on Fri Apr 17, 2009 at 04:43:08 PM EST
    statement is accurate: "I could not believe my eyes when I read it but it turns out that Citi was able to take to a $2.5 billion gain on a rule that lets it record any declines in the market value of its debt as an unrealized gain. The rule, which Citi adopted in 2007, reflects the possibility that a company could buy back its own debt at a discount, which under traditional accounting methods would result in a profit. But Citi didn't do that -- this has to be some kind of an error".

    It wouldn't surprise me that the "error" is that the author goofed this up. However, I admit that I don't know.

    Parent

    Read the Transcript of... (5.00 / 1) (#57)
    by santarita on Fri Apr 17, 2009 at 05:36:56 PM EST
    the Phone Call between Citi and the analysts today which can be found at Seeking Alpha web stie.

    Here is what I extracted before my eyes glazed over:

    $2.7 billion net benefit from CBA on our own non-monoline derivative positions and a $541 mn benefit in revenue accretion.

    "Our own CDS spreads widened significantly which created substantial gain on our derivative liabilities positions.  This resulted in 2.7 bn mark to market gain."  

    On another subject, I see where the banks undergoing the stress tests will have to file an 8-K at the end indicating how much capital within 6 months they need to raise and whether they will do it privately or through the government.  The FDIC is working with the SEC on the disclosure wording.

    Parent

    I think I actually understand this. (5.00 / 1) (#60)
    by steviez314 on Fri Apr 17, 2009 at 06:15:35 PM EST
    Let's say you and I have a bet--I will pay you $1 for each point the Dow is under 10,000 at the end of 2009.

    At the end of March, the Dow is, say, 8000, so I have a contingent liability (which I have been recording and expensing since we started the bet) of $2,000 on my books, and you have an asset/gain of the same amount.

    But what if you hear I'm almost bankrupt and might only have a 10% chance of paying off the bet.  Accounting rules say you need to mark your asset down to 10% of $2,000, or $200.  So you take an $1,800 loss.  

    Accounting must be in balance, even between companies....so I mark down my contingent liability  to $200 and record an $1,800 gain.

    No cash changed hands, the Dow might be anywhere at the end of 2009 and I might be able to pay, so all these entries are non-cash, accrual type things so far.

    Yet, since I became a worse credit risk this quarter, you had to show a markdown/loss and I got to show a gain.

    Sick.

    Parent

    But what happens if I step in (none / 0) (#61)
    by nycstray on Fri Apr 17, 2009 at 06:37:36 PM EST
    as your friend and cover your bet when santarita becomes concerned you can't?

    Parent
    You mean like a ....bailout.. (none / 0) (#62)
    by steviez314 on Fri Apr 17, 2009 at 06:41:00 PM EST
    or just to ensure the stability of the betting system?

    Parent
    Bailout (none / 0) (#64)
    by nycstray on Fri Apr 17, 2009 at 06:47:48 PM EST


    Parent
    That's A Good Explanation... (none / 0) (#65)
    by santarita on Fri Apr 17, 2009 at 07:12:22 PM EST
    and it actually makes sense in an accounting kind of way.  But like I said upthread, you can't make too much out of one quarterly report because there are likely to be one time occurrences and accounting miracles.

    Parent
    This doesn't have anything to do (none / 0) (#68)
    by Green26 on Fri Apr 17, 2009 at 11:23:48 PM EST
    with Citi issued bonds/debt, though, does it?

    While I have not looked tonight, when I looked earlier, I couldn't find anyone or anything else that supported what that quote said.

    Parent

    As an aside.... (5.00 / 2) (#9)
    by kdog on Fri Apr 17, 2009 at 01:05:33 PM EST
    what the hell happened to the science of accounting?  Seems like it involves every trick in the book except actual..ya know, accurate counting of receivables and payables.

    It's Not Science... (5.00 / 1) (#10)
    by santarita on Fri Apr 17, 2009 at 01:07:59 PM EST
    it's more like alchemy - turning lead into gold.

    Parent
    So if a debt obligation (none / 0) (#13)
    by Catch 22 on Fri Apr 17, 2009 at 01:13:45 PM EST
    of $1000 becomes a debt obligation of $800 that should not be accounted for?

    Parent
    Heh (none / 0) (#14)
    by Steve M on Fri Apr 17, 2009 at 01:16:03 PM EST
    Do you understand the difference between a decline in the market price of a debt issue, and a decline in the value of the underlying debt?

    Parent
    Of course I do (none / 0) (#16)
    by Catch 22 on Fri Apr 17, 2009 at 01:22:42 PM EST
    I just put it in consumer terms so it is more easily understood here.

    Parent
    Gee, thanks for the help, Oh master .... (none / 0) (#20)
    by lambert on Fri Apr 17, 2009 at 01:37:57 PM EST
    ... of the universe?

    What's the "consumer term" for Goldman Sach's year with only 11 months?

    Parent

    If they can shuffle... (5.00 / 1) (#23)
    by kdog on Fri Apr 17, 2009 at 01:44:26 PM EST
    the numbers to make millions appear and disappear, why not write a month off the calendar?

    Parent
    Actually they reported (none / 0) (#22)
    by Catch 22 on Fri Apr 17, 2009 at 01:42:58 PM EST
    their loss in December. Are you disappointed?

    Parent
    Goldman was required to change its (none / 0) (#37)
    by Green26 on Fri Apr 17, 2009 at 02:33:36 PM EST
    fiscal year to the year end, when it became a bank holding company.

    Prior to that, Goldman's year end was November 30. Historically, many investment banks and brokerage firms have had non-calendar year fiscal years.

    Goldman does not have any 11-month fiscal years. It has only 12-month years, with one one-month period inbetween.

    While there would be some discretion in deciding which period to book losses in, there is not alot of discretion under the rules. Also, their accounting firm and regulator would be looking over their shoulder on this.

    Parent

    Carlo Gambino (none / 0) (#74)
    by NYShooter on Sat Apr 18, 2009 at 05:21:57 PM EST
    would've dubbed it " 'leven finger Louie."

    Parent
    Hey, book-keeping is great... (none / 0) (#75)
    by lambert on Sun Apr 19, 2009 at 12:47:31 PM EST
    ... and I'm all for it, especially when honestly done. So I'm grateful for the experts on this thread who are sharing their thoughts and feelings about it, despite their narrow focus on technical minutiae. Which I don't believe is tendentious or obfuscatory in any way. [snicker]

    But maybe the rest of us, not being completely naive, can distinguish between (1) book-keeping, (2) the spin given by the press to reporting, and (3) the effect of the (no doubt entirely predictable, to insiders) of the reporting? I mean, when we've got everybody yammering about green shoots based on leven finger Louie's say so, should the technical accuracy of the reports really be the focus of our attention? Of course not. It's the manipulation that should be.

    Parent

    I only took a couple of accounting (none / 0) (#15)
    by Inspector Gadget on Fri Apr 17, 2009 at 01:16:07 PM EST
    courses in college, but I'm pretty sure the $200 difference needs to show up on the books, too.

    Parent
    I never took accounting.. (none / 0) (#17)
    by kdog on Fri Apr 17, 2009 at 01:27:03 PM EST
    If I owe somebody a grand, I owe them a grand regardless of market conditions.  

    Obviously I'd never make it as an accountant...my math has rules.

    Parent

    You are right (none / 0) (#19)
    by Catch 22 on Fri Apr 17, 2009 at 01:34:40 PM EST
    In Cit's case is shows up as the CVA (credit value adjustment).

    Parent
    Do you have a credit card (none / 0) (#24)
    by waldenpond on Fri Apr 17, 2009 at 01:45:02 PM EST
    If you buy a car for $10,000, drive it off the lot, it is now worth $6,000.  In the real world, you (or your business) do not write off the $4,000.  The cost of the $10,000 is depreciated over a specified 'life time'  or the difference would be incurred at the sale of the car.  Another example would be real estate... the gain/loss is recorded on the sale of the home.

    In a rational world, there is no gain/loss until the sale of the asset.  You should transfer income/loss to the balance sheet, not transfer loss of asset as income/loss to the income statement until the sale of the asset.  For me, it's hypocritical to take the write the asset down to current, record the loss then refuse to sale the asset as you don't like the current value.

    Parent

    Well (none / 0) (#28)
    by Steve M on Fri Apr 17, 2009 at 02:00:06 PM EST
    The accounting rules are different for capital acquisitions, intangibles, whatever... it gets complicated although I'm sure there's logic to it if you wear a pocket protector.  

    Imagine if Citi's stock dropped by 50% and they were allowed to record it as an unrealized gain on their financial statements, on the theory that "hey! we might buy back that stock (we haven't, but that's what makes it unrealized), and now it's cheaper!"  Sounds insane, but that's not very far off from how they're apparently allowed to treat their outstanding debt.

    Parent

    Debt and stock are treated differently. (none / 0) (#38)
    by Green26 on Fri Apr 17, 2009 at 02:37:41 PM EST
    And they should be. Apples and oranges.

    Debt is an obligation to pay someone. Equity evidences ownership in the company.

    Debt is listed on the balance sheet. While there is a line item for Stockholders Equity on the balance sheet, it does not fluctuate with the stock value, nor does stock value impact the income statement.

    Parent

    Thank you, Captain Obvious (none / 0) (#43)
    by Steve M on Fri Apr 17, 2009 at 02:42:25 PM EST
    but the fact remains, getting to write down your own debt obligations as a result of your own perceived lack of creditworthiness is pretty counterintuitive.

    Parent
    Industries (none / 0) (#39)
    by waldenpond on Fri Apr 17, 2009 at 02:38:02 PM EST
    all have different standards.  

    Someone brought up 'generally accepted acct practices' yesterday.  At a bare minimum, consistency should be applied.  Going through audits used to require justification, running schedules that showed the position of the firm before and after substantial accounting changes, etc.  Changing your acct year (disappearing December), being allowed to currently apply mark to market, etc.... I would love to see those schedules.

    Parent

    Some of this seems to me as though (none / 0) (#72)
    by BackFromOhio on Sat Apr 18, 2009 at 01:10:52 PM EST
    the accounting rules, even though faithfully followed, again are helping to cover up a 10-b-5 problem, as may have happened with Enron.  I.e., I, company X, am accounting for everything strictly according to SEC accounting rules, but overall, there is omission to disclose facts (or misleading disclsure of) a reasonable investor would want to know in deciding whether to buy or sell company X stock?

    Parent
    I Was Making A... (none / 0) (#48)
    by santarita on Fri Apr 17, 2009 at 03:12:56 PM EST
    general comment.  Maybe lead into gold isn't right.  How about lead into semi-precious stones?

    Parent
    I dunno (5.00 / 1) (#56)
    by sj on Fri Apr 17, 2009 at 05:36:43 PM EST
    It actually kind of sounds more like turning gold into lead and then painting the lead with goldish paint.

    But I admit the details of this whole situation make my head explode.  Not the kind of data my mind is set up to parse.

    Parent

    I Can Only Parse... (5.00 / 1) (#58)
    by santarita on Fri Apr 17, 2009 at 05:40:47 PM EST
    through this stuff for about 10 minutes without losing interest.  Maybe the people who have do this for a living should get paid a lot.  

    Parent
    This one time... (5.00 / 2) (#52)
    by MileHi Hawkeye on Fri Apr 17, 2009 at 03:32:16 PM EST
    ...at accounting camp...I pulled 2.5 billion out of my arse.

    /American Pie'd

    Parent

    These aren't tricks. (none / 0) (#35)
    by Green26 on Fri Apr 17, 2009 at 02:26:04 PM EST
    They're what the accounting rules provide. These companies didn't write the rules; they're just following them.

    Some of you seem to think the banks should adhere only to accounting rules that are negative to them. Sheesh.

    Parent

    The companies DID write the accounting rules (5.00 / 1) (#63)
    by imhotep on Fri Apr 17, 2009 at 06:46:13 PM EST
    Why do you think mark-to-market was suspended?
    Congress and the banking industry forced FASB to suspend those accounting rules.
    And the switch from GAAP to IRFS?  Another example of industry writing accounting rules.

    Parent
    GAP (none / 0) (#44)
    by waldenpond on Fri Apr 17, 2009 at 02:43:57 PM EST
    Again, someone brought up GAP yesterday.  There are many ways to adhere to GAP, one aspect that is most important is consistency.  They must justify acct changes.  Let's see the schedules before and after the changes.  Budgeting must be a nightmare.  Any financial analysis must be a nightmare if it is to have any integrity.  My understanding is mark to market is to be temporary... that doesn't meet GAP standards in the slightest.

    Parent
    Citi's Press Release and... (none / 0) (#59)
    by santarita on Fri Apr 17, 2009 at 05:42:54 PM EST
    phone call did have a lot of 2008 to 2009 comparisons and did have a number of footnotes explaining accounting variations.  

    Parent
    Green26, you can't possibly (none / 0) (#51)
    by cpinva on Fri Apr 17, 2009 at 03:28:19 PM EST
    be that naive', or can you?

    These companies didn't write the rules; they're just following them.

    do you think the FASB resides in a vacuum? perhaps the AICPA exists in a parallel universe?

    no, my ignorant friend, they do not. where do you suppose the accounting rule writers get the ideas for the rules they propose? wait, let me guess: they eat "funny" mushrooms, and they appear to them in a vision!

    um, no, that's not it. nope, the ideas come from the same people who pay the firms to do the audits, and the same firms that perform the audits. oh sure, they gussy it up with some high falutin' rhetoric, about how it serves to present a more accurate reflection of the financial position of the entity, at that point in time. how it better serves the needs of both internal and external interested parties.

    the bottom line, for way too long, is that, in the banking/investment industry, it has mostly served management, not the sh's,  the creditors, the government or the general public.

    as for that "huge" profit: let me see the actual cash, then i might, just might, get a tingle down my leg.

    probably not.

    Parent

    cpinva, have you ever taken an (none / 0) (#53)
    by Green26 on Fri Apr 17, 2009 at 03:43:13 PM EST
    accounting course? Do you think this accounting rule was written for and by Citi? And you're calling me ignorant and naive? Too funny.

    Parent
    From long ago, in a galaxy far away ... (none / 0) (#66)
    by RonK Seattle on Fri Apr 17, 2009 at 08:18:35 PM EST
    ... this may (or may not) help:

    Camp Enron Scoutcraft: Flatland meets String Theory

    Parent

    Short memories... (none / 0) (#67)
    by kdog on Fri Apr 17, 2009 at 10:42:42 PM EST
    indeed. Profiling is wrong, but those in favor should advocate for putting SEC agents to randomly audit white dudes in suits over 40 at the private jet hangar.

    I know fool us twice shame on us, fool us ad naseum shame on who exactly...the creator?

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    We're going down (none / 0) (#2)
    by SOS on Fri Apr 17, 2009 at 12:21:34 PM EST
    If a majority of the country buy's this we're no doubt totally screwed.

    I think (none / 0) (#73)
    by BackFromOhio on Sat Apr 18, 2009 at 01:14:45 PM EST
    a good part of the country that buys the 1st quarter "profit" stories is mad as hell that these institutions were bailed out with taxpayer $. The part that doesn't believe the profit news was always mad about the bailout. This news seems to be a lose-lose for the banks.

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    hmm (none / 0) (#12)
    by wystler on Fri Apr 17, 2009 at 01:12:20 PM EST
    and Mr. Dimon's looking for guidance from the Treasury Dept, eh? i got some guidance for him right here ...

    I assume you know that Dimon (none / 0) (#41)
    by Green26 on Fri Apr 17, 2009 at 02:40:16 PM EST
    does not work at Citi.

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    Dimon has been (none / 0) (#49)
    by waldenpond on Fri Apr 17, 2009 at 03:13:38 PM EST
    a very busy boy.  Goldman Sachs, Amer Express, on to (yes) president at Citibank, then to Bank One until he landed at JP MOrgan.

    [In 2004 James Dimon--well known as Jamie--an executive who spent most of his career under the tutelage of Citigroup's Sandy Weill, finally emerged from the tycoon's shadow, doing so as a viable threat to his once revered mentor.]

    Dimon

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    Citi's "Earnings:" A One Time $2.5B Profit In Derivatives | 75 comments (75 topical)

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