Citigroup Posts New Losses, Cuts Workforce

However, $2.5B Shortfall Less Than Expected For Largest U.S. Bank

(CBS/ AP)  Citigroup posted another loss and laid off 6,000 employees in the second quarter as it struggled with surging loan defaults, but the $2.5 billion shortfall was smaller than Wall Street anticipated.

The biggest U.S. banking company by assets said Friday that it lost the equivalent of 54 cents per share in the April-June period. In the same timeframe last year, the bank earned $6.23 billion, or $1.24 per share.

Analysts surveyed by Thomson Financial had predicted a larger loss of 66 cents share.

Citigroup Inc.'s securities and banking division wrote down the value of its assets by $7.2 billion, before taxes, and an asset revaluation cost its consumer lending business $745 million. Those write-downs totaling about $8 billion are significantly lower than write-downs taken in the first quarter and in last year's fourth quarter.

However, credit costs jumped to $7.2 billion as more consumers defaulted on their loans - implying that while losses in the credit markets are decelerating, losses from actual defaults in Citigroup's mortgages, home-equity loans, auto loans and credit card lines are mounting.

The $7.2 billion in credit costs included $4.4 billion in credit losses and a $2.5 billion charge to bulk up reserves for future loan losses.

Credit.com's John Ulzheimer told CBS News correspondent Anthony Mason that lenders are moving quickly to cut their losses.

"What the credit card issuers have done for the past six months is really draw a line in the sand and say, 'No more, we're gonna make a massive flight to quality," Ulzheimer said.

So banks are lowering credit limits on those clients with poor payment records, raising minimum payments for many borrowers and closing inactive accounts - all to reduce their risk, Mason reports.

Citigroup has failed to turn a profit for three straight quarters, losing a cumulative $17.4 billion during that period after writing down its assets by about $46 billion. Its shares have tumbled 65 percent over the past year, and recently hit their lowest point since the day Citicorp and Travelers combined in October 1998.

But after better-than-expected results from two other big consumer banks this week - JPMorgan Chase & Co. and Wells Fargo & Co. - the market appears to be deciding that the prospect for the ailing financial sector may not be as dire as they feared.

Citigroup's results were helped by asset sales, lowered expenses, and record revenues in transaction services, interest rate and currency trading and commodities.

The bank has raised about $40 billion over the past several months by shedding businesses, lowering its dividend, and selling stock.

And during the second quarter, Citi lopped off $99 billion from its total assets, which now stand at $2.02 trillion. Back in May, Chief Executive Vikram Pandit said the bank would shrink its then-$2.2 trillion in balance sheet assets by about $400 billion to $500 billion over the next few years.

"While there is still much to do, we are encouraged by our progress in delivering on our commitment to the re-engineering efforts," Pandit said in a statement.

Not all financial services companies have been clearing the low bar that Wall Street set for them this quarter.

The brokerage Merrill Lynch & Co. late Thursday reported a wider-than-expected quarterly loss and write-downs from losing investments in the debt markets approaching $40 billion. The credit lender Capital One Financial Corp., meanwhile, posted a larger-than-expected profit decline.

[wardoglrs]

"There is only one way that leads to an improvement of the standard of living for the wage-earning masses, viz., the increase in the amount of capital invested. All other methods, however popular they may be, are not only futile, but are actually detrimental to the well-being of those they allegedly want to benefit. %u2026 Public opinion believes that the improvement in the conditions of the wage earners is an achievement of the unions and of various legislative measures. %u2026 As long as these fallacies prevail upon the minds of the voters, it is vain to expect a resolute departure from the policies that are mistakenly called progressive."

[flagship-usa]

iphyt4u at 09:13 PM : "...history of this Great Nation."
America is still a British Colony: in function and form...a mirror image of England.

[whiskyrocker]

The economy is just in a "slow down" Keep telling yourself that.

[nskduke2]

How about we vote for the right people this fall, democrat,republican,independent.

[iphyt4u]

If any of you people believe anything that the Bush administration is telling you, or the banks, and the Fed are telling you, your just plain naive and stupid. If this is the best the Republicans can do, I would suggest voting straight ticket Democrat in the fall. Worst President in the history of this Great Nation.

[iphyt4u]

If any of you people believe anything that the Bush administration is telling you, or the banks, and the Fed are telling you, your just plain naive and stupid. If this is the best the Republicans can do, I would suggest voting straight ticket Democrat in the fall. Worst President in the history of this Great Nation.

[vnveteran72]

All of you are just about hitting the nail on the head. It is rather simple: rich people controlling poor people. The Congress is bought and paid for by the rich. So, the Congress responds to and does what rich people tell it to do, just like a Pavlovian dog. Is it any accident that the top 1% of the rich people in this country are worth a combined $16.8 trillion? That is more than 90% of everyone else. HUTCHINSTEPP has it right. It is time to vote third party from local politicians all the way up to the White House. Many people say third party candidates never win. If we all vote for third party candidates, guess what, they just might win. It is not so much the people as it is THE SYSTEM that needs changing.


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Posted by gracchus1 at 05:05 PM : Jul 18, 2008
+ report abuse

If the people voted out ALL incumbents, and replaced them with NON-Million/Billionaire, regular citizens, which would serve a max of 2 terms, and eliminate lobbyists and the corruption they bring, we may have a chance of restoring our Constitution and Individual Freedom and Liberty. Without such a scenario, our Once Great Nation is doomed. The Wealthy Ruling Elite will continue to construct their system of Lords and Surfs, Landowners and Slaves. It''s time for a Revolution like our Founding Fathers had against a similar "Royalty".
Hang them from Trees from Coast to Coast.
(After a Fair Trial of course)

[anniegirl50]

Well it appears that their agenda is to drive our economy in the ground. No loss to them with oil prices as high as they are. Once they have finished destroying the US financially, they move in and ISLAM takes over. hahahaha

With the purchase of a 4.9 percent stake, Abu Dhabi, the largest emirate in the United Arab Emirates and its capital, would rank as Citigroup''s largest shareholder ahead of Los Angeles-based Capital Group Cos. and Saudi billionaire Prince Alwaleed bin Talal, data compiled by Bloomberg show.


Of course, the fact that they are buying in tells us the UAE has confidence in CitiGroup''s future. Additionally, it tells us they have confidence in the future of American markets.

On the other hand, now Saudi Arabia and UAE are two of the three largest holders in CitiGroup and one has to wonder what agenda they will assert on the Board of Directors.

[jw218389]

The BIGGEST ARAB FINANCE COMPANY lays off American Workers.... SHOCKING!!!!

The BushLadens are destroying the middle class-what''s left of it....

[g-gfather]

As the American tax payer is sold into bondage by the bail out of corrupt corporations by the traitorous politicians their money can buy,the stock markets rally in celebration of their plunder.
Our childern,our grand-childern our great-grand-childern will have NO AMERICA !!!STOP THE CARNAGE NOW
--IMPEACH-CIVIL DISOBEDIENS-REVOLT..THE FUTURE OF OUR
AMERICA IS AT STAKE. For the childern. Great-grandfather

[anniegirl50]

Here is a good reason to not elect a democrat in 2008

BILL CLINTON was elected in 1992 on a platform of "putting people first." His campaign promised health care reform, gay rights legislation and an end to Republican threats to abortion rights, among many other things. Yet over the next eight years, Clinton left behind a trail of broken promises on all these issues.

With the Bush administration on the rampage at home and abroad, many people have forgotten this. They look back to the Clinton years as a time when the right wing didn''t dominate U.S. politics and working people''s living standards got significantly better. Actually, these impressions are false. Whether you look at class inequality, or government programs for the poor, or the rights of women and minorities, or military intervention abroad, the generalized ruling-class offensive in the U.S. didn''t begin in January 2001, but stretches back through the Clinton years and beyond.


After all, the same arguments were made in favor of voting for Clinton in 1992--that we couldn''t afford four more years of Republican attacks from a White House run by George Bush Sr. Remembering the real record of the Clinton administration means remembering that Clinton betrayed almost every hope for a substantial change from what came before him.

[oneworldusa]

Posted by HUTCHINSTEPP at 04:18 PM : Jul 18, 2008

I agree. It would be nice to have a party for and by the people without agendas.

[oneworldusa]

How come the hard-working legal citizens of America keep getting screwed over and their livlihoods threatened by doing the exactly what the people making the bad decisions are asking them to do?

Need another CEO announcement here like Wachovia and WaMu.

[wardoglrs]

Americans can blame Repubs but that is just pointing fingers cause the dems are in control of congress and what have they done? NOTHING.. See there all the same and you all keep playing in there game of point and blame when in fact its the same people in office that play Americans like a fish on the line.
they know what there doing and you all keep falling for the same ole *** on and on and on...
Grow up vote 3rd party and show them who''s boss.

[anniegirl50]

It took 5 days to provide water to hurricane Katrina victims. It took less than 5 minutes to electronically transfer funds to banks. Worst president ever.


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Posted by iphyt4u at 04:49 PM : Jul 18, 2008
+ report abuse


That Katrina mess is the result of the failure of the Mayor of New Orleans and the Governor of Louisiana.
The President of the United States is not a First Responder. Point - look at the recent flooding in IOWA. The very capable Mayors and the Governor of that state took care of their people. Nobody crying in Iowa blaming the Admin for a natural disaster that the Mayor and Governor failed to respond to properly. Mayor, Governor....first responders.......

[gracchus1]

All of you are just about hitting the nail on the head. It is rather simple: rich people controlling poor people. The Congress is bought and paid for by the rich. So, the Congress responds to and does what rich people tell it to do, just like a Pavlovian dog. Is it any accident that the top 1% of the rich people in this country are worth a combined $16.8 trillion? That is more than 90% of everyone else. HUTCHINSTEPP has it right. It is time to vote third party from local politicians all the way up to the White House. Many people say third party candidates never win. If we all vote for third party candidates, guess what, they just might win. It is not so much the people as it is THE SYSTEM that needs changing.

[iphyt4u]

Bush''s republican welfare, tax breaks for oil companies, and endless supplies of money for banks. It took 5 days to provide water to hurricane Katrina victims. It took less than 5 minutes to electronically transfer funds to banks. Worst president ever.

[antoniof123]

Hey America another bail out thank a Republican for this one too.

[sistatee-2009]

Citibank is controlled by the Rockefeller family, as is President Bush and the U.S. government. With the possible exception of a few Yale Bonesmen, David Rockefeller has ruined his own bank and the government, almost single-handedly. No doubt, he''ll contact George and demand a bailout for the bank.

[hutchinstepp]

We have to pull together as a country and as people. No Democrats No Republicans. Only Citizens. Its got to stop or we will be a 3rd world country.