Time for the chump or the year award and the winner is?

By Daniel at 19 November, 2008, 7:25 pm

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Citicorp has a $2 trillion balance sheet - twice the size of AIG’s, or the same size roughly as AIG and Goldman combined. Why do I use the AIG/GS analogy? Because we can assume Citi’s assets are of kind and quality as both AIG and GS. I took a look at Citi’s latest quarterly filing and the disclosure stinks. But let’s generously say that Citi needs to take down the value of its assets, generically, by 20% and be generous and not include off-balance-sheet items in that mark-down. Rest assured Citi has plenty off-balance-sheet of what destroyed AIG and Wamu and Lehman and Bear and Wachovia…
If you generically reduce the value of Citi’s stated balance sheet by 20%, that would shear $400 billion off vs. Citi’s stated book value of $126 billion. Did they teach Vik Pandit how to spell “i-n-s-o-l-v-e-n-t” at his University?

Citi paid $800 million for Pandit’s old hedge fund, Pandit made $165 million on the sale, and they closed down that hedge fund June, just 11 months after Pandit flipped into Citi. Can someone please have their Congressman investigate Pandit and Citi on this transaction? Citi also announced the closing of another hedge fund it runs and it has roughly $800 million in debt that Citi will be liable for AND they are absorbing another $17 billion in off-balance-sheet SIV assets that are no doubt worthless.
I think my estimate of Citi’s insolvency looks very generous indeed. The biggest question of all is whether or not Paulson will bail out yet another butt-buddy (Robert Rubin, ex-GS CEO is on the board of directors) with taxpayer money, or will he do the right thing and let Citicorp collapse?