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Mike Mayo Tells Clients Numbers Out Of Citi Can Not Be Trusted
CLSA's Mike Mayo has taken his fight with Citi management one step further, after releasing a note to clients titled "A Matter of Trust" in which he said: "We believe that Citigroup’s financial targets can encourage short-term excesses over long-term prudence. Citi has an aggressive financial target of 5% asset growth when so much of its past problems stem from excessive asset growth." Fox Business reports that according to the often times contrarian analyst the "big bank can't be trusted to provide investors with accurate disclosure
about its financial condition or future plans to make money, and that
the firm is setting the stage for future problems similar to those that
nearly caused the bank to fail two years ago, prompting a massive
government bailout."
More from Charlie Gasparino:
Mayo also once again took issue with Citigroup's account as it relates to so-called Deferred Tax Assets, which are tax credits that under certain circumstances can be used to bolster capital levels and profits. Mayo says Citigroup relies on DTAs to strengthen its balance sheet more than any other of the big banks, and stated, as he has in recent days, that the bank is failing to write down substantial portions of its DTAs, a charge that Citigroup has denied.
"Citi's deferred tax asset -- $50 billion -- is more than twice as large as any other US corporation and the largest as a percentage of tangible equity among large banks (39%), but it has not recognized any write-down (or related adjustment) even though most other companies in a similar position (3 years of cumulative losses) have taken write-downs," Mayo wrote. "This position is further supported by news that the SEC has investigated these issues. In short, the company claims no DTA adjustment is warranted based on its projected earnings over the next couple of decades. More importantly, accounting precedents seem to us to warrant that a write-down is necessary. The stakes are raised since the lack of a write-down could lead to investor lawsuits later on."
The note is sure to escalate tensions between Mayo and the big bank, and its CEO Vikram Pandit, who for the past two years has not taken a meeting with the veteran securities analyst, nor have members of his senior staff, including chief financial officer John Gerspach.
Charlie will host Lehman expert Dick Bove on Monday to debate why Mayo's view is wrong. Which alone, of course, makes it 100% correct off the bat.
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off-topic (or not ?!)
The Biggest Lie About U.S. CompaniesHealthy balance sheets? They owe $7.2 trillion, the most ever
You may have heard recently that U.S. companies have emerged from the financial crisis in robust health, that they've paid down their debts, rebuilt their balance sheets and are sitting on growing piles of cash they are ready to invest in the economy.
You could hear this great news pretty much anywhere — maybe from Bloomberg, which this spring hailed the "surprising strength" of corporate balance sheets. Or perhaps in the Washington Post, where Fareed Zakaria reported that top companies "have accumulated an astonishing $1.8 trillion of cash," leaving them in the best shape, by some measures, "in almost half a century."
Or you heard it from Dallas Federal Reserve President Richard Fisher, who recently said companies were "hoarding cash" but were afraid to start investing. Or on CNBC, where experts have been debating what these corporations are going to do with all their surplus loot. Will they raise dividends? Buy back shares? Launch a new wave of mergers and acquisitions?
It all sounds wonderful for investors and the U.S. economy. There's just one problem: It's a crock.
see the rest of it @
http://finance.yahoo.com/banking-budgeting/article/110218/the-biggest-li...
Tyler, I still sit on a shitload of Citi stock so let's skip this topic until it get's back to 4.8
When were they supposed to be trusted?
+1 Boilermaker.
criminals have a hard time gaining trust
Thank you.
it depends on what your definition of accounting fraud is
It depends on what the definition of is...is.
Depends when the Fed pulls their thumb from FASB's butts.
The looters control the media but not your brain...
Mayo calling out Pandit on the Conf Call was priceless - Maybe Shapiro will give him observer status during the inquiry
Ever seen that movie, Get Shorty?
Citi never did/does this sort of stuff. Never.
Merrill’s Risk Disclosure Dodges Are Unearthed
Published: August 9, 2010
It was named after a faint constellation in the southern sky: Pyxis, the Mariner’s Compass. But it helped to steer the mighty Merrill Lynch toward disaster.
Barely visible to any but a few inside Merrill, Pyxis was created at the height of the mortgage mania as a sink for subprime securities. Intended for one purpose and operated off the books, this entity and others like it at Merrill helped the bank obscure the outsize risks it was taking.
http://www.nytimes.com/2010/08/10/business/10merrill.html?_r=4&pagewante...
Massive accounting fraud. Move along, nothing new here.
I heard this guy and Pandit are on the same Coop Board over in Lefrak City and Bove used to be the building super.
In short, the company claims no DTA adjustment is warranted based on its projected earnings over the next couple of decades.
Projected earnings over the next couple of decades ? I think we have located another problem. Delusional forecasts.
Got that right!
Delusional used to = non-GAAP. But GAAP is dead so...............
Mayo is incorrect. Citigroup has a 50% Asia-Pac 50% USA Franchise split. That's a MUCH BETTER revenue split than any other bank that we know of. Perhaps that's why Paulson and Company is taking such an interest? We sure think so. Shawn Mesaros, Pamria, LLC
So you're telling me they will get double penetrated with the implosion of Asia (again) and US (again).
Stop putting two and two together to come up with four!!! Current mark to model forecasting shows the total as 1,249,999,999,999.36
Cherry picking data while ignoring reality, bitchez!
So you trust the 20 year projection too?? Good luck.
The citi lights turn my blues into gold.
I think Mike has a good point on the tax assets, less so on the asset growth. Citi has picked up some loans in the past couple of quarters, but the subsidiary banks have been wallowing arounf $1.3 trillion in total assets for years. The OBS exposures are rising however, which may signal a return to the bad old days.
The one thing about tax assets is that the impairment, if any, only happens at the end of the year. Talking about it in August is a bit gratuitous, but no doubt it is good to remind C's CSUITE and their auditor. Regulators play no part in this farse. Chris
Citibank is probably the most OVERCAPITALIZED banks in the United States.
No one wants to like (or accept) the fact that these banks were able to hugely cash up.
True. Citi has a capital guarantee provided by the US taxpayer. Citi stands only through the fraudulent enabling of the US gubmint. And the free money extended by our favorite currency manipulator - the Fed.
The "crappiness" is completely "past tense" and in a world without a USA comsumer who's incrementally saving more for a very long time, while a LOT OF OTHER banks cannot "paper over" their losses--- Citibank, by virtue of its SUPERIOR market position and geographic spread--- Citibank is fully capable of papering over this problem. They will grow while others simply mark time. The US Taxpayer was used to "bandaid" Citi's off-balance sheet liabilities which were around $2 Trillion. Now that this is passing, Citi actually asked to have the "wrapper" removed because it was costing them too much money. People like to keep singing the same song even though the dance is over, and then they find themselves ultimately singing alone. Shawn Mesaros, Pamria, LLC
Greek News Sources Report that Plan B on Debt Restructuring May Be Taking Shape
Have made a few bucks over time shorting any Bove recommendations. I think even Crazy Cramer has made fewer bad calls than the bearded Bove.
Earnings going out decades? Are you shitting me? If they had to tell the truth they wouldn't last months....let alone 1 (one) decade.....
Burn in hell SHITTBANK!
I think that you meant to type an "I" in lieu of the second "T" in SHITTBANK...
It's kinda hard for an acquirer to purchase DTA if the target writes them off.
Think about it, the only stick save justification for buying C is 'instant' US market access and $140 billion shield on profits.
Of course the other side of the coin is that C is insolvent and will be insolvent for the foreseeable future barring the M&A move I note above and there's no shortage of egomaniacs out there in the finanicial world thinking they can pull this off.
Citi is a GSE so their numbers are as good as TPTB want them to be.
When C finally goes belly up, and it will, never will a bigger bunch of assholes deserve it. I had the misfortune of working there for a few years, thankfully before the shit hit the fan, and, oh... the stories I could tell.
If Mayo causes a run on this bank which triggers a run on other banks he could be arrested under one of those obscure terrorism laws or even arrested for creating a public nuisance by pointing out that the whole banking system is a Ponzi scheme or The King (Bank) has no clothes (money). Cops would be, "just doing their jobs, protecting the public.".
Go Mayo, hold the bacon, lettuce and tomato, we just want the bread!
ok, so where are the cops. Why is M. Mayo alone on this. Hellooooo,.. SEC??...anyone?? A frickin' Banana Republic we've become.
ok, so where are the cops. Why is M. Mayo alone on this. Hellooooo,.. SEC??...anyone?? A frickin' Banana Republic we've become.
Why does Mayo think that Shiti's DTAs are excessive and unusable? After all, Shitibank is owned by ObaMAo, Banana Ben and Turbo-Tax Little Timmy. They'll find a way to help Shiticorpse utilize those tax assets. For example, they could allow shiticorpse to sell them to other companies that can use them.
In any event this is all a red herring. Banana Ben and Little Timmy have already made it quite clear that Shitibank will never have a capital shortfall, because they'll simply take Shiti's bad assets onto their balance sheet, or just pump more taxpayer capital onto Shiticorpses's balance sheet
this guy Mayo better not take too many hot tub baths in Maine any time soon
Pandit did 9/11. Sorry, but someone had to say it.
Bove on Charlie:
http://goingconcern.com/2010/08/dick-bove-the-kpmg-citi-team-is-an-exceptional-group-of-auditors/
Banksters books are real. Why the cynicism?
Citi shares were as low as $2 back in the early '90s. By all rights, it should be dead by now. Like it or not, it would seem to be untouchable.
The Big C is actually being pretty honest about leveraging it's TBTF position.
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