Citigroup Steers Past the Potholes

Updated from 10:48 a.m. EDT

Citigroup(C Quote) continued to suffer for its bubble-era ethics Thursday, reporting its worst quarter in years thanks to the cost of paying off the angry former owners of WorldCom and Enron.

Despite all the bad headlines and legal reserves, however, the world's biggest financial services firm continued to earn money at a breathtaking pace.

Few companies could absorb the $4.95 billion provision Citi recorded in the second quarter and still walk away with a profit of $1.14 billion, or 22 cents a share. Citigroup pulled it off by leveraging a broad franchise that continues to fire on all cylinders and is largely untroubled by the prospects of higher interest rates. ...