Archive for Monday, October 17, 2011

Citigroup earnings rise 74 percent, to $3.8 billion

October 17, 2011


— Citigroup Inc.’s earnings rose 74 percent in the third quarter as more of its customers paid their bills on time, leading to lower losses from loans. An accounting gain also boosted income.

It was the seventh straight quarter of income growth for Citi, the nation’s third-largest bank by assets. Citigroup was one of the biggest recipients of taxpayer support during the financial crisis. It received $45 billion in bailouts funds and was partly owned by the government until December 2010.

The New York bank’s net income rose 74 percent, to $3.8 billion, due to lower losses from loans and an accounting gain related to the valuation of the bank’s own debt. Citi’s stock fell 1.7 percent to close at $27.93, less than other banks stocks.

The profit report came as the Occupy Wall Street movement entered its second month and spread across the country, targeting large financial institutions like Citi. As of Monday, the bank said it had not yet been approached by organizers of the protest following an offer last week from Citigroup’s CEO, Vikram Pandit, to meet with them.

Occupy Wall Street rallies started last month in New York with protests against income inequality and demands for higher taxes on the wealthy. CEOs like Pandit are prime targets. On Saturday, two dozen people were arrested after they entered a Citibank branch in New York and refused to leave.

Banks like Citi have benefited as Americans have improved their financial health, saving more and paying off their credit card debt on time. Citi’s losses from bad loans fell 41 percent during the quarter to $4.5 billion as defaults fell on Citi-branded cards. That allowed Citi to add $1.4 billion to its earnings from credit reserves it had set aside earlier in anticipation of deeper losses.

However, the bank’s ability to collect fees from raising interest rates on loans or from fees for late payments has decreased because of new regulations. That led to a 9 percent drop in revenue at its North American consumer business. Rival Wells Fargo & Co., which also released its results Monday, took a similar hit to its credit card fee income due to new banking rules.

Citi said a new regulation has also changed its plans for its private-label credit card unit, which issues cards in partnership with retail stores. Citi had said it was planning to either sell or reduce the size of the unit. The bank reversed course after noticing that customers are using retailer-issued cards more. Pandit said in an internal memo to employees the business earned $2.2 billion so far this year as delinquencies declined.


Mike Gerhardt 3 years, 11 months ago

Unfortunately, I am sure that some poster here will write that CITIGROUP is an evil corporation that must be stripped of its earnings.

jafs 3 years, 11 months ago

Did you catch the part about the $45 billion bailout by taxpayers?

oldvet 3 years, 11 months ago

Yes, but I didn't see anything about the fact that Citibank repaid those loans.

jaywalker 3 years, 11 months ago

Two years ago, jafs. Why is it you're unable to do an internet search of your own?

jafs 3 years, 11 months ago

I don't have the time or inclination to do that on all topics.

And, I think it's reasonable to ask people to document their claims.

Having done a little research on this one, it's not as clear as you might think.

First, the TARP program was not simply a loan program - the government guaranteed risky assets from the business, and bought shares in it as well.

Second, in just a few years, a business that seemingly needed a massive bailout has done well enough that we can now sell our shares of the company and get the money back.

Hmm - why did they need our help exactly? I thought they were on the verge of failure.

jaywalker 3 years, 11 months ago

Sorry, jafs, but saying you don't have the time is a crock. Instead of typing "source?" you can type in a 4 or 5 word key search. This particular subject will come right up.
I don't care about the minutia you decided to heap on here after the fact. You questioned whether the loans had been repaid. If you have a problem with the result or why they received help in the first place, ask President Obama. I'm sure his administration gave it to them for no reason whatsoever. Sheesh.

jafs 3 years, 11 months ago

As I said, they weren't in fact "loans" at all.

And, they weren't "repaid" either.

Finally, the TARP program was in fact instituted by the Bush administration.

Also, I said "or inclination".

jaywalker 3 years, 11 months ago

Fine. You're too lazy to research. They're not loans even though that's what everyone refers to them as. They weren't repaid, even though they were. And while TARP was started under Bush, Citigroup didn't receive backing until the Obama administration authorized it.

For someone who supposedly wishes to have productive conversations you have an odd way of showing it. I don't have a problem with someone asking for citation for spurious claims, much like bozo's tripe below. But if it's as simple as "elephants are gray" and you don't feel "inclined", well, that's a you problem.

jafs 3 years, 11 months ago

I certainly hope you're not going to continue insulting me, as that would mean I'd have to stop talking with you.

I have never engaged in that practice with you, or anybody else, for that matter, so I'd appreciate it if you'd stop.

This is my point - I've already had to spend more time and energy researching this than I would have if the fellow had furnished a source.

The situation is complicated - some of the money Citigroup got was in fact a credit line of the US Treasury, but other money was essentially a government purchase of their stock.

At first, the stock was "preferred", which incurs some obligation on the company's part, but they managed to switch it to "common", which has no such obligation.

Big picture - the company made a bunch of stupid, perhaps fraudulent, decisions, and when they got into trouble, they convinced the US government (us) to bail them out.

We did so, and the result was that their business stabilized, and did well enough that we could recover our investment.

Sounds like we did them a pretty huge favor to me.

jaywalker 3 years, 11 months ago

I apologize if you felt insulted, though I feel you're being a tad too sensitive. I responded to your 'source?' request and you digressed the subject, which seems to happen quite often when I engage with you. Your post preceding this last was not productive engagement, it was merely obfuscation. My sarcastic response probably had more to do with having to deal with the likes of bozo and gandalf than yourself, and for that I again apologize, but I'd appreciate an honest reply myself rather than a dispersal of the actual subject.

jaywalker 3 years, 11 months ago

And not for nothin', I agree we did them a gigantic favor and I believe TARP was a bad move from the start.

jafs 3 years, 11 months ago

Thank you.

What's the point for you exactly?

I asked for a source, and you responded that I should look it up myself.

Ok - you're entitled to your opinion.

I don't really see any conversation there myself.

Actually, you asked sarcastically why I'm "unable to do an internet search"?

What kind of conversation do you expect will follow from that sort of thing?

jaywalker 3 years, 11 months ago

Keyword search: 'Citigroup pays back TARP'

Didn't expect a conversation then. Hoped you'd learn to research on your own.

jafs 3 years, 11 months ago

For me, the subject was, and still is, Citigroup.

Folks who like to praise private sector businesses and criticize the government praise Citigroup and others for "paying back" their loans.

That neatly ignores the fact that it's more complicated than that - the government stepped in and rescued these businesses, often by buying toxic assets that nobody else would, and assuming a great deal of risk.

Then, the businesses stabilized, and the government was able to get some (almost all, I think) of their investment back.

It worked out ok, but it very well might not have, and taxpayers would have lost their investment.

jaywalker 3 years, 11 months ago

I don't disagree with any of that. Like I said, I thought it was a bad move from the start.

Crazy_Larry 3 years, 11 months ago

Citibank received $25-billion in TARP funding from BushCo and another $20-billion from ObamaCo.

"Over the past several decades, the United States government has engineered at least four different rescues of the institution now known as Citigroup. During the most recent tax-payer funded rescue, by November 2008, Citigroup was insolvent, despite its receipt of $25 billion in federal TARP funds, and on November 17, 2008, Citigroup announced plans for about 52,000 new job cuts, on top of 23,000 cuts already made during 2008 in a huge job cull resulting from four quarters of consecutive losses and reports that it was unlikely to be in profit again before 2010."

jaywalker 3 years, 11 months ago

Perhaps you wouldn't leap in like a jackass, Agno, if you'd cared to start at the top of this string. It wasn't me that didn't include a source. And I, too, cite when appropriate.

Like I said before, I don't really care if someone doesn't include a source if the assertion is easily verifiable with a short, common sense keyword search. Finding out if Citigroup paid back TARP takes two seconds, as much time as it does to request another poster to provide citations. Now, when someone like the resident clown below or FalseHope or any number of others on here start making questionable assertions (i.e. bozo: "They only repaid them because they didn't want any restraints on the 7 to 9 figure salaries for their executives as they throw people out of their houses."), then I'll request citation.

just_another_bozo_on_this_bus 3 years, 11 months ago

They only repaid them because they didn't want any restraints on the 7 to 9 figure salaries for their executives as they throw people out of their houses.

jaywalker 3 years, 11 months ago

Oh. Not because it was a loan and you're obligated to pay it back? Odd.

just_another_bozo_on_this_bus 3 years, 11 months ago

The loans were made to stabilize the banks that got them. But the banks repaid them before they were actually stabilized for the reason I cited above.

just_another_bozo_on_this_bus 3 years, 11 months ago

If you don't know, it's because you think that willful ignorance makes you seem like you're in the mythical reasonable middle ground.

jaywalker 3 years, 11 months ago

Fine. Then cite your proof they paid the loans back so they could foreclose and keep their bonuses. I'm betting that challenge will be the end of this string.

Crazy_Larry 3 years, 11 months ago

"As the chaos from the financial crisis has subsided, many banks have become eager to throw back the government’s lifeline — partly as a sign of strength, but also to rid themselves of the additional oversight, including curbs on executive pay, that came with it."

"But after banks return the TARP money, the administration will forfeit much of its leverage over them. With that loss goes a rare opportunity to overhaul the industry. The administration’s ability to push institutions to purge themselves quickly of bad assets and do more to help hard-pressed homeowners will be diminished."

"The banks are eager to escape TARP and the restrictions that come with it, particularly the limits on how much they can pay their 25 most highly compensated workers."

just_another_bozo_on_this_bus 3 years, 11 months ago

And many of those who got loans didn't use the proceeds to make new loans and stimulate the economy-- they instead either used it for further speculative investments, or bought US bonds which required the taxpayers to pay them interest on their own money.

jaywalker 3 years, 11 months ago

He won't be back, or at least he won't post again. And if so, it certainly won't be with evidence.

jafs 3 years, 11 months ago

You could, of course, look it up.

If you do, you may find bozo is correct - although one of the stated purposes of TARP was to stimulate lending, the government didn't require it.

So, banks looked at the money as something they could do anything they liked with, and acted accordingly.

jaywalker 3 years, 11 months ago

Perhaps it's a reading comprehension problem you're suffering from, jafs? In any case, if you wish not to be insulted, I'd recommend not being snide.

voevoda 3 years, 11 months ago

Citigroup isn't evil, but with all their profits, they are in an ideal position to give to charities that help the poor. The corporation can give, and so can its executives individually. If they do what Bill Gates does, then they won't be identified as greedy. And at the same time, they can cut their tax obligations, too.
If they don't want to pay taxes and they don't want to give to charity, then they are plain greedy. I don't have a lot of sympathy for greedy people.

parrothead8 3 years, 11 months ago

I didn't read where voevoda said Citigroup was "obliged" to give money away. Perhaps you could point that part out? I did read something about them being "in an ideal position" to help, which would be nice, especially after taxpayers helped them out in their time of need. Instead, they jack up fees on simple checking accounts to boost their already insanely-high profits.

cato_the_elder 3 years, 11 months ago

Voevoda says: "I don't have a lot of sympathy for greedy people."

Not unless they're greedy for government handouts.

madameX 3 years, 11 months ago

Or at the very least pay their account holder a better interest rate, or pay their lower-level employees a better wage...

jaywalker 3 years, 11 months ago

Slow down and check your facts before starting a diatribe, voe. Citigroup and their employees are deeply involved in philanthropy around the globe. Pretty impressive record as a matter of fact.

gl0ck0wn3r 3 years, 11 months ago

Define greedy. How do you know Citigroup doesn't do anything with charities?

tomatogrower 3 years, 11 months ago

Or they could give their employees who are low on the totem pole a raise, or hire more to relieve the work load. Create jobs.

jafs 3 years, 11 months ago

Read Artilce 1, Section 8 of our constitution.

jafs 3 years, 11 months ago

That's an un-American thought.

If the founders had meant to create a libertarian society, they would have done so.

They did not.

jafs 3 years, 11 months ago


It's interesting, and more complex than people seem to think.

For example, the government bought and then eventually sold stock in the company - that's rather different from making a loan and getting it paid back with interest.

Also, what happened to the original $25 billion from the first TARP program - the one that wasn't enough?

deec 3 years, 11 months ago

It's lovely that we bailed out the con men at Citi over and over again. They'll pay $258 million in fines for this scam, but only earned $160 million on it. Of course, if they hadn't got caught, that $160 million would be profit.

Richard Heckler 3 years, 11 months ago

More fraud: The problem is "once the money left the building, the government(Bush Admin) lost all track of it.

The beginning banks, the first nine, the big banks, they all got their money one day after a meeting with Henry Paulson, in which he told them, “You’re taking this money.” But after that, the process was much more convoluted. And some banks lobbied for the money. Others banks didn’t lobby for the money but were told they were taking it. It all — what we basically concluded early on, that there was really no plan to this at all. While Treasury said that the purpose was to get credit flowing back into the system, the fact of the matter is, the way they went about this made no sense at all.

There were just a handful of institutions that were terribly weakened. AIG the insurer, Bank of America, Citigroup, those three were clearly in very weakened form. So, many of the other big banks were not."

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