Citi had $600 bil. of this toxic stuff – basically they are bankrupt

One of the reasons I am so bearish on Citi is that they have up to $600 bil. of SIV’s and another $150 bil. in CDO roughly at the peak. So far, they wrote off around $50 bil. – that’s a bad joke. They are a multiply Lehman factor by many means. Bernanke and Paulson are thoughtless morons who do not know squat on how to handle the situation and, after all, they repeat the same mistakes as the Japanese did 20 years ago.

Excerpt from Bloomberg:

Citi Agrees to Acquire SIV Assets for $17.4 Billion (Update1)

By Brad Keoun

Nov. 19 (Bloomberg) — Citigroup Inc., the fifth-biggest U.S. bank by market value, agreed to acquire $17.4 billion of assets held by structured investment vehicles advised by the company.

Citigroup said today in a statement that the value fell from $21.5 billion as of Sept. 30, reflecting market declines of $1.1 billion and $3 billion in debt that matured or was sold.

SIVs, which Citigroup invented in 1988, emerged 15 months ago as one of the first major strains in credit markets rocked by record high foreclosures on subprime mortgages. Citigroup, the biggest manager of the funds, has reduced the assets of its SIVs from $87 billion in August 2007.

Citigroup was forced to bail out seven troubled SIVs in December, assuming $58 billion of debt, as a slump in credit markets eroded the value of their assets.

SIVs were set up to make money by selling short-term debt and buying longer-dated and higher-yielding assets including bank bonds, mortgage-backed securities and collateralized debt obligations. The short-term debt was bought by money-market funds as well as government investment pools that manage cash for schools and towns.

Many of those buyers refused to roll over their investments after becoming concerned that the SIVs’ assets lost value as credit markets began melting down last year.

Citigroup, which has lost 73 percent on the New York Stock Exchange this year, fell 29 cents, or 3.5 percent, to $8.07 at 9:41 a.m., the lowest value since Nov. 1, 1995.

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~ by behindthematrix on November 19, 2008.

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