This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Citigroup Was Punished for Not Playing Nice With the Feds

Additionally, although all TARP money has been repaid by the group in the table above, Citigroup was on the hook for the most TARP money and asset guarantees for nonperforming loans. So there might be some residual concern about whether Citigroup could deliver acceptable results in the event of another catastrophic event mimicked by the stress tests given its history of poor performance in the financial crisis of 2008.

Also complicating matters is the most recent $400 million loan fraud in Citigroup's Banamex unit in Mexico, which highlights the difficulty in managing risk in foreign countries. Althogh the Federal Reserve did not mention this incident in its report, it goes to the heart of what concerns regulators in their comments cited above.

Although, I am sure no one will ever admit it, relations between regulators and Citigroup's previous management did not go smoothly. They were harshly criticized from as early as 2009 for taking inordinate risk (bad loans) and complicated banking operations of the "supermarket" banking model that nearly led to Citi's collapse.

This criticism, along with the rejection of Citi's capital plan last year, led to the resignation of former CEO Vikram Pandit.

Several analysts have said that they were "shocked" by the rejection to return excess capital to shareholders.

Citigroup is overcoming a large stigma from their recent past, however, and it's clear management needs to mends fences and do a better job guiding its regulators on risk assessment on all of its operations, including expansive global operations.

See article on money center stock values: "Make Some Bank on Bank of America"

At the time of publication, the author held shares of BAC, C and WFC.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.


Gene Kirsch, independent senior banking analyst, genekirsch.net, has more than 20 years of financial industry experience in credit-risk portfolio management, lending and loan review analysis within various sized, regional credit unions, finance companies and banks at both the retail and commercial level. He has led a major independent ratings firm's bank and credit union ratings division of over 14,000 institutional ratings and developed the methodology for global bank and credit union ratings. He has numerous published articles, quotes in various national publications and appeared in several media interviews. He holds a Bachelor of Science in Management Information Systems and Finance from the State University of New York at Buffalo and a minor in Psychology with continued educated in commercial banking with various institutions in Florida and North Carolina.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
C $50.59 0.00%
AAPL $109.27 0.00%
FB $88.26 0.00%
GOOG $600.70 0.00%
TSLA $241.93 0.00%

Markets

Chart of I:DJI
DOW 16,102.38 -272.38 -1.66%
S&P 500 1,921.22 -29.91 -1.53%
NASDAQ 4,683.9190 -49.5780 -1.05%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs