Monday, November 24, 2008

Annals of unintended consequences: Citi bailout entry

(FT Alphaville) Who’s next? The thing about so large and individual a bailout as Citi’s last night, is that it rather shows up other institutions in its wake.

The below are ratios at US banks of Tangible Common Equity divided by risk weighted assets.
Obviously these are crude measures, but then, deleveraging is a rather indiscriminate economic force.

Looking unhealthy: Wells Fargo/Wachovia.


(A hint of schadenfreude perhaps… Caveat lector: the figures have been recently calculated by Citi.)

Another couple of WFC/WB facts: Mortgage assets make up 25 per cent of the balance sheet, and 20 per cent of all mortgage assets are ARMs.

Anyway, as the FT - or rather, Citi CFO Gary Crittenden - notes today:

Responding to criticism that Citigroup was getting special treatment that would not be available to another institution, Mr Crittenden insisted that the arrangement was deliberately packaged in “a plain vanilla flavour” so it could be applied to other lending institutions

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