Saturday, December 15, 2007

Citigroup Comes Clean

"Citigroup Inc., badly bruised by mounting losses, is bailing out seven affiliated investment entities, bringing $49 billion in assets onto its balance sheet and further denting its capital base. ... The move could be the death knell for an industrywide effort to create a rescue fund for SIVs. ... Still, Citigroup's move is surprising because the bank made it clear in its most recent filing with the [SEC] that it 'had no contractual obligation' to support any of the SIVs it sponsored. Citigroup said in its filing that it wouldn't take any actions to consolidate the vehicles on its books", WSJ, 14 December.

What did Citigroup do? If it put the assets on its balance sheet, it "consolidated" them. That Citigroup denied it would do this a few weeks ago gives the SEC an opportunity to investigate Citigroup's SEC filings. Where are the Wells notices? Is the Southern District of NY's US Attorney loading his guns? Stay tuned. See my 27 November post.

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