Money | 03/10/2009 8:45 am

U.S. Mulls More Lifelines for Surprisingly Strong Citigroup

By The Staff at wowOwow.com

As some of the nation’s biggest banks struggle to regain their footing, the U.S. government has been quietly debating offering more lifelines to one in particular: Citigroup.

The Wall Street Journal reports that U.S. officials are discussing "contingency" plans for Citigroup, should it need more help. The bank’s already received several bailouts from the government, and should be alright — particularly since there are no really bad signs like corporate clients or others taking their business, and their money, elsewhere — but just in case, the government wants to be prepared. The feds are doing "stress tests" on all the big banks to make sure they can survive under even the toughest economic conditions.

Meanwhile, Citigroup CEO Vikram Pandit is grinning over the fact that his bank had its best quarter in the beginning of this year — its most heartening performance in a year. In a company memo — obtained by Bloomberg — Pandit said the company was profitable the first two months of this year, and had $19 billion in revenue. Although the stock price is hovering just above $1 now, Pandit said, "I don’t believe it reflects the strengths of Citi." Pandit also said Citi has conducted its own "stress test" and he is "confident" of its capital strength, according to The Financial Times.

News of that memo may be doing some good. Early news this morning showed European stocks rising for the first time in awhile, and Citi shares gained 19 percent here in the U.S. in pre-market trading.

In still more Citi news, Reuters says the company canceled a swank trip to the Bahamas for about 1,900 of its top performers from the Primerica Financial Services division, but is paying out $13 million to those employees to say "sorry." The bank also gave some Smith Barney employees $3.5 million of debit cards instead of trips. Citigroup says it’s cut a lot of costs, but still needs to find cheaper ways to retain and recruit some of the nation’s best talent. Dow Jones says Smith Barney bled more than 500 financial advisers in the first seven weeks of 2009, some of whom went to UBS Wealth Management U.S.

12 Reader Comments (so far…) Sign In or Register to comment

ladies, let me tell you a true story, which may help explain why Citi did so well. This story is one that made my gut hurt when I learned it…and I hope you tell everyone you know….

An elderly woman at my church…and by elderly, she is 81 yrs years young….and still perky…has a credit card backed by citi…and she has been paying attention to the news, too. She drives her own car, lives by herself, and she pays attention to the news and how it affects her..After hearing on the news that people should call their CC companies and see if they can;t get a lower rate, she thought she would do that! Her intent? She told citi that she was elderly, she wanted to pay off her credit card, and that if she could get a lower interest rate, she could do it much faster, by making larger contributions to her debt, less to interest. She told citi, she realized she was ‘gettin up there’ and was wanting to ’clean up’ her obligations, so that her family would not have to do so, for her, when she is gone….and… GUESS WHAT CITI DID?

The jacked up her interest rate to 30%!!!!!! THIRTY PERCENT! She now realizes that had she NOT called them, she would still be at 8%….

This is a TRUE STORY!!! And I have already written to my Republican representative and my Democrat Senator….and Whitehouse.Gov…and I am telling EVERYone….this is just not right!

By Patty E on 03/10/2009 9:19 am

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This doesn’t surprise me one little bit—frankly Citi and the rest need to fail or be nationalized. And they’re still giving their execs bonuses. Bastards/

By f p on 03/10/2009 9:47 am

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That’s usurious, in my opinion. We need to re-define and institute guidelines, with clear ramifications, for usurious conduct. It hurts everybody.

By Ms. Dee on 03/10/2009 10:16 am

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Dee, if you want to listen to a fascinating interview, listen to this from Morning Edition on the Bear-Stearns CEO. It blew my mind when one thinks what these guys are putting us through, and what we will go through for years to come because of them:

http://www.npr.org/templates/story/story.php?storyId=101681538

By Diana T on 03/11/2009 5:00 pm

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Hi Diana,

That was pretty amazing. I just now had a chance to listen. I thought it was going to be something about usury, but to find out Bear Stearns was run by a bridge-playing bookie, is equally reinforcing of my view regarding what’s been going on on Wall Street for the past decade or so. Thanks.

By Ms. Dee on 03/12/2009 9:44 pm

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Sometime when I get a chance, I will read the book. The interview blew me away.

By Diana T on 03/12/2009 11:16 pm

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Let Citi fail. I have heard similar stories about Citibank and they need to be stopped. There’s nothing wrong with letting banks/companies fail because of unethical business practices! I wish they had never had an "infusion" of cash from the American people.

Let them serve as an "example" to other banks.

By deber B on 03/10/2009 10:01 am

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There are two states that do not have Usury laws…and that is why a ton of CC companies set up shop there, paperwork wise…when I researched this sunday night—-one was N.D., and I am having a senior moment on the name of the other state—-but I learned they have (citi) charged UP TO 33%!

By Patty E on 03/10/2009 10:29 am

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No the banks don’t need more money for bailouts. they need to be redefined. Need to have new rules and regulations. I think the hard part is if we let them fail we fail American people. Imagine all the people who will not be able to get to there money if the banks fail!

By Grande Camper on 03/10/2009 11:05 am

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Capital One did that to all their customers also…they automatically jacked up their interest rates, regardless of your past payment history, good or bad.

By C Hardy on 03/10/2009 11:13 am

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Last week wowOwow was touting Jim Cramer’s ‘opinions’ so as there is no proper place to put this excerpt from the NYT along with the link, I’ll drop it here:

"Last week Jon Stewart whipped up a well-earned frenzy with an eight-minute “Daily Show” takedown of the stars of CNBC, the business network that venerated our financial gods, plugged their stocks and hyped the bubble’s reckless delusions. (Just as it had in the dot-com bubble.) Stewart’s horrifying clip reel featured Jim Cramer reassuring viewersthat Bear Stearns was “not in trouble” just six days before its March 2008 collapse; Charlie Gasparino lip-syncing A.I.G.’s claim that its subprime losses were “very manageable” in December 2007; and Larry Kudlow declaring last April that “the worst of this subprime business is over.” The coup de grâce was a CNBC interviewer fawning over the lordly Robert Allen Stanford. Stewart spoke for many when he concluded, “Between the two of them I can’t decide which one of those guys I’d rather see in jail.”

Led by Cramer and Kudlow, the CNBC carnival barkers are now, without any irony whatsoever, assailing the president as a radical saboteur of capitalism. It’s particularly rich to hear Cramer tar Obama (or anyone else) for “wealth destruction” when he followed up his bum steer to viewers on Bear Stearns with oleaginous on-camera salesmanship for Wachovia and its brilliant chief executive, a Cramer friend and former boss, just two weeks before it, too, collapsed. "

http://www.nytimes.com/2009/03/08/opinion/08rich.html?em

By DeBúrca obj on 03/10/2009 11:41 am

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LaHood Hits Back Hard Against Charges Of "Socialism," "Obama Recession"

excerpt: "Asked about this line of attack, replete with phrases like the "Obama recession," Secretary LaHood offered a similarly ardent rebuke. If blame is to be cast, he declared, it can only, at this point, lie with the previous White House.

"This is not an Obama recession," he said. "He inherited all of this. He inherited a $1 trillion dollar debt. He inherited the recession. He inherited the lousy stock market. All of this was inherited. The guy has been in office a little over a month and what he has tried to do is listen to every economist he could listen to. And he put in place some opportunities to get people to work quickly through the transportation bill portion of it, to help the banks, and to help the real estate industry. And it is going to take time.""

By DeBúrca obj on 03/10/2009 12:06 pm