tag:blogger.com,1999:blog-8918506024298353276.post977899968105036528..comments2023-09-20T07:41:02.432-04:00Comments on Polecolaw: Open Questions for CitiPalermo's Bloghttp://www.blogger.com/profile/09467127128993089930noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-8918506024298353276.post-77897701522175318532010-02-16T06:00:46.576-05:002010-02-16T06:00:46.576-05:00polecolaw.blogspot.com; You saved my day again.polecolaw.blogspot.com; You saved my day again.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8918506024298353276.post-17735367775633603732010-01-05T09:34:46.027-05:002010-01-05T09:34:46.027-05:00Your blog keeps getting better and better! Your ol...Your blog keeps getting better and better! Your older articles are not as good as newer ones you have a lot more creativity and originality now keep it up!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8918506024298353276.post-75754309267236528972007-11-08T00:17:00.000-05:002007-11-08T00:17:00.000-05:00Bull or bear? I am a bear, but I have been wrong ...Bull or bear? I am a bear, but I have been wrong plenty of times. I think the housing decline is a symptom of over-leverage in our financial system, and we need to de-leverage before we can get back to healthy growth. What makes bulls think the only systematically bad lending was in the subprime housing market? Many others, however, believe that strong export growth will offset economic weakness caused by the housing decline and the market will do better when the “soft landing” becomes clear. Soft landing or hard landing - I wish I had a crystal ball. Today the hard landing crowd won. Tomorrow? I’m watching the data like everyone else and staying cautious. <BR/><BR/>Regarding the FED, see my post <A HREF="http://polecolaw.blogspot.com/2007/11/america-on-sale.html" REL="nofollow">here</A>.Palermo's Bloghttps://www.blogger.com/profile/09467127128993089930noreply@blogger.comtag:blogger.com,1999:blog-8918506024298353276.post-65020491808009661202007-11-07T19:11:00.000-05:002007-11-07T19:11:00.000-05:00DJ plunged 360 points today, stocks of major finan...DJ plunged 360 points today, stocks of major financial banks all dropped and dollar keeps making record low againt Euro. Do you think it's the beginning of the bear market? If so, how would Fed react to the market? Oil price is $98/barrel.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8918506024298353276.post-78186549640493387512007-11-07T13:18:00.000-05:002007-11-07T13:18:00.000-05:00I tried posting this yesterday from my Berry, but ...I tried posting this yesterday from my Berry, but the browser is apparently not able to work with blogger.<BR/><BR/>Mark,<BR/><BR/>I actually participated in the Citicorp audit many years ago. Their auditors are on site throughout the year conducting interim testing and providing other audit related services. The quarterly releases (both press and SEC) are reviewed by the auditors. While this is not an audit, they do provide comments. Generally, the bank wouldn't issue statements that they believed would be changed in the audit.<BR/><BR/>If you look at the second newest post on my blog (<A HREF="http://blog.lawrencedloeb.com/2007/11/do-you-want-to-understand-whats-driving.html" REL="nofollow">blog.lawrencedloeb.com</A>) you will find links to three white papers that were issued on October 3rd by the Center for Audit Quality and the related FASBs (and a Fitch report discussing the reporting guidelines). These white papers guide auditors on how certain items (including SIVs) should be reported given the recent market turmoil.<BR/><BR/>As for the credit lines, my understanding (from my research and conversations), is that SIVs are generally established with credit lines to bridge possible issues in the ABCP market (typically around 10% of assets). I don't believe that the reported credit lines were new, but they were considered worth reporting, separate from other contingent lines, because the SIV issue has been so in the news.<BR/><BR/>Under the CAQ white papers, it may be necessary to book exposures, even without being legally obligated to take on the assets. That would explain the comment that you were questioning. <BR/><BR/>It is unclear who's ABCP Citi owns, but it easily could be related to entities that they don't control (SIVs managed by others or other ABCP issuers - they're not all SIVs).<BR/><BR/>As I mentioned in a response to an earlier post, notional value is a misleading indicator.<BR/><BR/>As for the reporting of the current value of the debt, the FASB requires that companies, in cases where a liability is related to an asset that is also being marked to market, mark the debt to market so that the match between the positions is properly reflected (otherwise there might be artificial gains and losses).<BR/><BR/>I'm not sure if I addressed everything, but I hope this was helpful.Lawrence D. Loebhttps://www.blogger.com/profile/05600981191177652648noreply@blogger.comtag:blogger.com,1999:blog-8918506024298353276.post-56335514239197634432007-11-07T09:42:00.000-05:002007-11-07T09:42:00.000-05:00ST - thanks for the link.ST - thanks for the link.Palermo's Bloghttps://www.blogger.com/profile/09467127128993089930noreply@blogger.comtag:blogger.com,1999:blog-8918506024298353276.post-34935348582467775812007-11-07T00:47:00.000-05:002007-11-07T00:47:00.000-05:00Sorry. Don't know how I got that link wrong. Let...Sorry. Don't know how I got that link wrong. Let me try again:<BR/><BR/>This <A HREF="http://www.ft.com/cms/s/0/17f683c2-8c9b-11dc-b887-0000779fd2ac.html" REL="nofollow">FT article</A> indicates that Citibank has bought the commercial paper of its SIVs.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8918506024298353276.post-8060080942283479982007-11-07T00:43:00.000-05:002007-11-07T00:43:00.000-05:00This FT article indicates that Citibank has bought...This <A HREF:HTTP://WWW.FT.COM/CMS/S/0/17F683C2-8C9B-11DC-B887-0000779FD2AC.HTML HREF="" REL="nofollow">FT article</A> indicates that Citibank has bought the commercial paper of its SIVs.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8918506024298353276.post-32155998329382775442007-11-06T16:16:00.000-05:002007-11-06T16:16:00.000-05:00First let me observe that I'm no CPA. Given that,...First let me observe that I'm no CPA. Given that, here's my opinion:<BR/><BR/>On 2. Observe that Citi's SEC filings are unaudited. The question you are raising seems to be whether Citi will be able to convince an auditor to sign off on its financials. <BR/><BR/>The only argument I can think of that they might get away with is that they have provided only a fraction of the financing for the SIVs and therefore have not taken action that will lead them to bear a majority of the losses in the SIV. <BR/><BR/>Accounting hanky-panky indeed.<BR/><BR/>On 3. IMO either Citi is holding it's own conduit's CP or the banks have put together a club to buy each other's conduit's CP. Don't know whether the latter would be legal. Maybe they're planning to use the telecom industry's justification: "When a government official says it's okay, I thought that meant it was legal." (Just kidding.)<BR/><BR/>On 4. Don't know anything about this, but thank you for posting it. Like you, I think it merits further explanation.Anonymousnoreply@blogger.com