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Tuesday Humor: "Citi Today Is A Different Bank Than It Was Before The Crisis"

Tyler Durden's picture





 

The FDIC decided to wait with its dose of pre-holiday humor until after the Barclays fixing for today's market close turned out to be spot on. And by that we mean that official release of the US banks' "living will" statements, which as far as we know is about the most worthless exercise ever conducted, and about the dumbest thing to be conceived by that very undynamic duo of Barney Frank and Chris Dodd. Because last we checked, the treatment of living wills in bankruptcy court, where all these firms will end up eventually anyway, is... non-existent. But the real fun is when one actually reads this indicative statement from Citigroup: "Citi is today a fundamentally different institution than it was before the crisis." And that's where we stopped. Because it is banks wasting their time (and taxpayer bailout money) on gibberish like this instead of analyzing the risk inherent in their prop positions that guarantees the next CIO-like blow up will not be just $5 billion but far, far more, and will certainly prove that living wills when one has to equitize tens of billions in unsecured debt are worth exactly didely squat.

One item of note may be what JPM says about its derivative based commodity exposure for obvious reasons. Here it is:

Commodities contracts are used to manage the price risk of certain commodities inventories. Gains or losses on these derivative instruments are expected to substantially offset the depreciation or appreciation of the related inventory. Also in the commodities portfolio, electricity and natural gas futures and forwards contracts are used to manage price risk associated with energy-related tolling and
load-serving contracts and investments.

And here is how Jamie Dimon mitigates counterparty risk:

The Firm uses credit derivatives to manage the counterparty credit risk associated with loans and lending-related commitments. Credit derivatives compensate the purchaser when the entity referenced in the contract experiences a credit event, such as bankruptcy or a failure to pay an obligation when due. Credit derivatives primarily consist of credit default swaps (“CDS”).

The same CDS that the banks being hedged against use as a source of Net Income via DVA adjustments at the end of every quarter.

For those who have more patience than us, here it is from the FDIC:

As required by the FDIC's regulation regarding resolution plans for systemically important financial institutions, (12 CFR section 381.8(c)), and, as applicable, the FDIC's regulation regarding resolutions plans for insured depository institutions (12 CFR section 360.10(f)), each resolution plan must be divided into a public section and a confidential section. The public sections available on the FDIC's website have not been edited or reviewed by the FDIC and are provided here exactly as submitted by the covered companies.

All files are in PDF format. For information on, or help with downloading the PDF reader visit PDF Help.

Plan Submissions with Public Sections

Legal Entity Legal Name of Parent Company Type of Plan Due By
Bank of America Corporation   165(d) July 2, 2012
Bank of America NA Bank of America Corporation CIDI July 2, 2012
FIA Card Services NA Bank of America Corporation CIDI July 2, 2012
Barclays Plc   165(d) July 2, 2012
Citigroup Inc.   165(d) July 2, 2012
Citibank NA. Citigroup Inc. CIDI July 2, 2012
Credit Suisse Group AG   165(d) July 2, 2012
Deutsche Bank AG   165(d) July 2, 2012
The Goldman Sachs Group, Inc.   165(d) July 2, 2012
Goldman Sachs Bank USA The Goldman Sachs Group, Inc. CIDI July 2, 2012
JPMorgan Chase and Co.   165(d) July 2, 2012
JPMorgan Chase Bank NA JPMorgan Chase and Co. CIDI July 2, 2012
Chase Bank USA NA JPMorgan Chase and Co. CIDI July 2, 2012
Morgan Stanley   165(d) July 2, 2012
Morgan Stanley Bank NA Morgan Stanley CIDI July 2, 2012
UBS Finanzholding AG   165(d) July 2, 2012

 

And select headlines on each from Bloomberg:

  • *CITI SAYS IT IS DIFFERENT THAN IT WAS BEFORE THE CRISIS   :C US
  • *CITI SAYS IT HAS MEANINGFULLY SHRUNK SINCE THE CRISIS     :C US
  • *CITI SAYS IF NEED RESOLUTION PLAN SR MGMT WOULD BE REPLACED

 

  • *BOFA PLAN CONTEMPLATES STRATEGY WHERE BOFA IN FDIC RECEIVERSHIP
  • *BOFA SAYS PHASE 1 OF PLAN TO CUT COSTS BY $5B/YR BY 2014
  • *BOFA SAYS PRIMARY RISK EXPOSURES IN TRADING PORTFOLIO, MSRS, EQUITY INVESTMENTS (interconnected like Japan?)
  • *BOFA SAYS IT DOENS'T USE MACRO-CREDIT HEDGING IN SOME GROUPS (do does use JPM-like tail-risk hedging in some then?)
  • *BOFA SEES ABLE TO QUICKLY GET CASH FROM US SECURITIES UNDER PLAN (selling into that avalanche should be fun?)

 

  • *BARCLAYS FOUND 6 US MATERIAL ENTITIES AS CORE FOR PLAN :BARC LN
  • *BARCLAYS SAYS FUNDING STRATEGY IS TO DEVELOP DIVERSIFIED BASE
  • *BARCLAYS SAYS BOARD IS RESPONSIBLE FOR OVERSEEING THE PLAN (which members?)
  • *BARCLAYS SAYS RISK FUNCTION TO MANAGE RESOLUTION ANALYSIS (like JPM?)

 

  •  *MORGAN STANLEY SAYS GLOBAL TREASURER RESPONSIBLE FOR 165D PLAN
  • *MORGAN STANLEY CITES ORDERLY LIQUIDATION AUTHORITY       :MS US
  • *MORGAN PLAN PREFERRED APPROACH IS SALE OF STANDALONE UNITS
  • *MORGAN PLAN POTENTIAL BUYERS COULD BE FINL, PRIVATE EQUITY
  • *MORGAN STANLEY PLAN HAS NO COST TO FDIC DEPOSIT INSURANCE FUND (magic)
  • *MORGAN STANLEY PLAN HAS NO SERIOUS ADVERSE EFFECTS ON STABILITY
  • *MORGAN PLAN SEES INSURED DEPOSITORS TIMELY ACCESS TO FUNDS

 

  • *DEUSTCHE SAYS PLAN WOULD ALLOW 'GOOD' AND 'BAD' SEPARATION
  • *DEUTSCHE: U.S. RESOLUTION PLAN ASSUMES U.S./GERMANY COOPERATION (yes aha)

 

  • *JPMORGAN SAYS HOLDS SIG. AMOUNT OF CAPITAL IN COMMON EQUITY
  • *JPMORGAN HAS COMP. RECOVERY PLAN ON ACTIONS TO AVOID FAILURE (Tail risk hedging?)
  • *JPMORGAN: FIRM COULD BE RESOLVED UNDER TITLE II OF DODD-FRANK
  • *JPMORGAN: TITLE II STRATEGY WOULD PROVIDE SINGLE POINT OF ENTRY
  • *JPMORGAN SAYS FDIC WOULD USE POWER TO CREATE BRIDGE ENTITY
  • *JPMORGAN SAYS ANY LOSSES ON RECAP WOULD BE BORNE BY EQUITY HLDR

 

  • *UBS AG SAYS 3 BUSINESS DIVISIONS IN U.S. OPERATE 7 CORE LINES

 

  • *DB GROUP SAYS IT'S WELL-PLACED TO FACE FUTURE WITH CONFIDENCE

 

  • *GOLDMAN SAYS NO DEPOSIT INSURANCE FUND EFFECT FROM PLAN  :GS US
  • *GOLDMAN SACHS FILES BANK RESOLUTION PLAN WITH REGULATORS :GS US
  • *GOLDMAN PLAN WOULD PROVIDE DEPOSITOR ACCESS WITHIN 1, 2 DAYS
  • *GOLDMAN: ALTERNATIVE RESOLUTION PLANS INCLUDE SALE,  BRIDGE BANK, ASSET LIQUIDATION

 

  • *CREDIT SUISSE STRATEGY MAY BE CHALLENGING IN EXTENDED DISTRESS
  • *CREDIT SUISSE SAYS SWISS REGULATOR HAS POWER TO FORCE SALE

 

from JPM on commodity hedging:

Commodities contracts are used to manage the price risk of certain commodities inventories.

 

Gains or losses on these derivative instruments are expected to substantially offset the depreciation or appreciation of the related inventory. Also in the commodities portfolio, electricity and natural gas futures and forwards contracts are used to manage price risk associated with energy-related tolling and load-serving contracts and investments.
people love this stuff cause of the mega short and what not

source: http://www.fdic.gov/regulations/reform/resplans/jpmc165.pdf

And here is the Citi statement in particular:

 

 


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Tue, 07/03/2012 - 14:18 | Link to Comment Yen Cross
Yen Cross's picture

 At least that's what CITIs CEO, " VikRAT Pandit" told Maria Barferomo last month!

Tue, 07/03/2012 - 14:32 | Link to Comment knukles
knukles's picture

Yeah.
Now more than ever, more people in more operations which don't even know of each other's existence, can fuck up more than ever with less supervision and greater organized confusion.

A far different place.

(sigh)

Tue, 07/03/2012 - 14:53 | Link to Comment battle axe
battle axe's picture

Lets see how well these geniuses do when the Euro goes boom...

Tue, 07/03/2012 - 14:59 | Link to Comment AldousHuxley
AldousHuxley's picture

ShittyBank ShittyGroup.

 

They done swindling money off of that saudi prince. They need to find Indian slave owning billionares to own this piece of shit, so they put Pandit as the puppet. 

 

Let's see if they can pull it off.

Tue, 07/03/2012 - 14:20 | Link to Comment LULZBank
LULZBank's picture

Did they have a sex change?

Tue, 07/03/2012 - 14:21 | Link to Comment Cdad
Cdad's picture

There is exactly zero chance that I will read Citi's thoughts on the matter of its future demise...or "how it's different this time."

Tue, 07/03/2012 - 15:06 | Link to Comment Sofa King Confused
Sofa King Confused's picture

each resolution plan must be divided into a public section and a confidential section.  The public sections available on the FDIC's website

 

Stopped reading right there....The same shit, show the public some BS and the confidential section that we can not read is hiding all the truth.

Tue, 07/03/2012 - 14:23 | Link to Comment Cursive
Cursive's picture

So this is like a prelude to the pre-packaged bankruptcy proceeding?

Tue, 07/03/2012 - 14:32 | Link to Comment francis_sawyer
francis_sawyer's picture

would that be like the "pre" pre-packaged?... Impressive innovation!

Tue, 07/03/2012 - 14:25 | Link to Comment EscapeKey
EscapeKey's picture

FDIC's regulation

Is that some sort of direction of how much porn one can watch during an hours worth of work?

Anyway, yes Citi, your brand new coating of lies and deceit looks totally different to the one before the crisis.

Tue, 07/03/2012 - 14:29 | Link to Comment t_kAyk
t_kAyk's picture

"Citi is today a fundamentally different institution than it was before the crisis." 

Yes, they now understand that they don't need to try and hide their atrocities as the masses do not understand or care about what is really going on, otherwise these fucks would be burning.

Anyone else hear that?  The biggest collective 'lulz' in history.  These crooks deserve everything that is coming their way. 

Tue, 07/03/2012 - 14:30 | Link to Comment francis_sawyer
francis_sawyer's picture

Don't tell me that Citi pulled an Anderson Cooper & came out of the closet!...

Tue, 07/03/2012 - 14:35 | Link to Comment EscapeKey
EscapeKey's picture

At least gay people state that their intention is to fuck you up the arse.

Tue, 07/03/2012 - 14:41 | Link to Comment francis_sawyer
francis_sawyer's picture

That's gotta hurt!

Tue, 07/03/2012 - 14:31 | Link to Comment Dubaibanker
Dubaibanker's picture

Last time I checked...Citi was still a 'Shitty' bank...

Tue, 07/03/2012 - 14:42 | Link to Comment knukles
knukles's picture

Goldman plan provides for depositor access within 3 or 4 businees days (or whatever)?

What fucking deposit base?

Arrrrrrrrrrrrrrrrrraaagggghhhhhhhh!

Why be so humble?
Why not just say instantaneous?
Why not scream to the heavens at no risk to the FDIC

since there are no fucking deposits at the fucking Bank....

Arrrrrrrrrrrrrrraaaggggghhhhhhhhh!

 

Smile when you say that.
No, I won't pull your finger.

There oughta be a national____________ a banker holiday.

Tue, 07/03/2012 - 14:46 | Link to Comment Yen Cross
Yen Cross's picture

 This quagmire does have a silver lining. All the equity is spoken for. Banks will splinter, and as a Credit Union (share holder) we will reap the spoils of mismanaged, head turning bank ( unit) sell offs!

  Lending will start again, and I'll have a local branch to gripe in!

Tue, 07/03/2012 - 14:44 | Link to Comment LULZBank
LULZBank's picture

What do you people have against Bankers??? Geez!

http://articles.nydailynews.com/2010-06-03/local/27066130_1_face-harassm...

 

Tue, 07/03/2012 - 14:51 | Link to Comment Yen Cross
Yen Cross's picture

 These guys aren't bankers. Here is the definition of banker.

    Do you see anyone accepting deposits, to move into lending activities? Outside of the (PROP desk)?!

Tue, 07/03/2012 - 14:50 | Link to Comment dwayne elizando
dwayne elizando's picture

Non-living things writing living wills! Dodd-Fwank. True genius at work!

Tue, 07/03/2012 - 14:53 | Link to Comment Wizard of Finance
Wizard of Finance's picture

totally true.

 

Citi shares used to be worth +50$/share ( now +500$) and now are worth 27,65 $/share. 

after having lost more than the victims of Madoff, the shareholders of CITI have painfully learnt how different it is now. 

Tue, 07/03/2012 - 14:56 | Link to Comment Winston Smith 2009
Winston Smith 2009's picture

"Citi Today Is A Different Bank Than It Was Before The Crisis"

Correct, it's most likely insolvent.

Tue, 07/03/2012 - 15:20 | Link to Comment midgetrannyporn
midgetrannyporn's picture

Pandit the bandit has done for C what he did for Old Lane.

Tue, 07/03/2012 - 15:23 | Link to Comment Conax
Conax's picture

"Commodities contracts are used to manage the price risk of certain commodities inventories. Gains or losses on these derivative instruments are expected to substantially offset the depreciation or appreciation of the related inventory."

RED ALERT! Look at this, boss- we're showing gains in value of our stock pile of commodities!

What will we do, OMG we're making money! Call Citibank and have them short soybeans before we go bankrupt on this windfall!

Ohhh, the humanity!

I am proud to say this makes no sense at all to me. Being Ivy league graduates, I'd think they could double-talk better.

Tue, 07/03/2012 - 19:05 | Link to Comment I should be working
I should be working's picture

"Citi is today a fundamentally different institution than it was before the crisis."

Yup, in 2008 Citi was a Ponzi scheme, now it's a government funded Ponzi scheme...

Wed, 07/04/2012 - 07:04 | Link to Comment rufusbird
rufusbird's picture

My first thought is how did all this risk management work out for MF Global?

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