Citigroup's Brief Legacy of Legacy Assets

One of the striking things in Citigroup's earnings announcement was its sale of "legacy assets." Legacy assets? What're those?

It turns out that Citi has been using the term since about May of this year. While "legacy assets" pops up on a New York Times item from 2000 (talking about telecoms), the only other uses in the newspaper all relate to Citi in 2008. According to Bloomberg's David Wilson, some other bankers have also started using the term recently â€"- something in the air at the country club, perhaps.

As far as I can tell, a legacy asset is something you owned until very recently, having just sold it. You could call them former assets or sold assets. But the term also implies that these are assets acquired by some former CEO, who never should have bought them or built them in the first place.

Citi says: "Total assets declined by $99 billion since first quarter 2008; approximately two-thirds from legacy assets." I suppose that means it sold $66 billion in assets and just flat out lost $33 billion.

It's a handy phrase. But an odd one. A legacy is usually (not always) something helpful. George Bush's dad went to Yale. That made him a legacy, which is nice. As president, Bush may be burnishing his legacy, which usually means a positive image. Of course, it's also possible to have a negative legacy.

The way Citi and current boss Vikram Pandit uses the term strikes me as false and wrong. First of all, nearly all the bank's assets are legacy assets in that Pandit did not acquire them. Second, aren't the legacy assets responsible for most of the revenues as well? Still, I doubt you'll hear Pandit say that 98 percent of earnings came from legacy businesses. No, the au courant CEO knows that the good assets that the bank still owns are not "legacies" -- they're his.