Citigroup Loses $7.6 Billion
This was expected. Citigroup announced that they had lost around $1.6 billion in the 4th quarter of 2009, mainly from trying to pay off the federal government, and that ends up giving them a loss of $7.6 billion for the year.
That’s certainly not the best news for a banking system that’s trying to convince everyone that they’re ready to be self sustaining and push forward for 2010. That loss, by the way, includes the tax breaks that they know they’re getting from the federal government that were related to the TARP loan, but doesn’t include any of the projected fees that President Obama is planning on hitting all the banks that got TARP money with.
Perspective can be a wonderful thing. The loss was compared to last year’s loss of $17.3 billion and thus is seen as things improving. Maybe my math is bad, but when you show a loss in 3 of 4 quarters in a year, and the only quarter you didn’t show a loss was because of the sale of one of your divisions, that’s not good at all in my eyes. Sure, it’s not as bad, but it’s still not good. And it’s definitely not Chase good, which posted a $3.3 billion profit.
I hate to be the one predicting bad news, but I don’t see Citigroup making a profit in the first quarter of 2010 either. They’re reducing their mortgage division, suffering more losses in their credit card division, and frankly have become too unwieldy. They’re saying they believe some of their foreign markets might be improving, but that’s “iffy” talk and nothing concrete. They’re missing this, but the American public doesn’t trust them after a series of sneaky and underhanded moves in 2009. It’s going to take more than “thank you” to get our trust back.
I don’t wish Citigroup bad karma, but it seems they’ve found a way to generate that on their own.
Mitch Reply:
January 19th, 2010 at 10:23 AM
Hey Tim,
Man, they just make it so easy to go after them, don’t they? The problem as I see it is that banks are looking at this thing all wrong. They keep jacking up fees and interest rates and doing all these punitive things, which isn’t encouraging anyone to want to talk to them. Last week at a board meeting we were discussing some things to do with our excess funds and I stated that we shouldn’t look at one of the major banks at all because of their tenuous position and how they’ve shown themselves to be untrustworthy, and all agreed with me. They need to work on credibility. I might suggest tightening up credit reviews, which makes sense, but I’d be trying to encourage my customers to use their cards by possibly dropping interest rates one or two percentage points and raising the limit on those customers whose credit histories have been good. People like rewards more than punishment.
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