Monday, March 19, 2012

Citi Group- Too Big to Succeed?

Bailing Bailing-- that's what we the people did for Citigroup & yet, they will be laying off 4500 people.

The L.A. Times reports:
"Citigroup Inc. shares fell  after Chief Executive Vikram Pandit said the bank will lay off 4,500 employees as it attempts to trim costs in an "extremely challenging operating environment."

The cuts, which amount to less than 2% of Citigroup's approximately 267,000 employees, will be spread over several quarters, Pandit said at an investor conference, sponsored by Goldman Sachs Group Inc. Citigroup will take a $400-million charge in the fourth quarter related to the layoffs, factoring severance and other expenses. 
Not just Citi--
Bank of America Corp. said in the fall that it plans to cut out 30,000 jobs over the next few years. JPMorgan Chase and Swiss lender UBS also said that they plan to shrink their headcounts."

According to the NYTimes, on February 23, 2009, Citigroup announced that the United States government would take a 36% equity stake in the company by converting $25 billion in emergency aid into common shares with a US Treasury credit line of $45 billion to prevent the bankruptcy of the largest bank in the world at the time. The government would also guarantee losses on more than $300 billion troubled assets and inject $20 billion immediately into the company. In exchange, the salary of the CEO is $1 per year and the highest salary of employees is restricted to $500,000 in cash and any amount above $500,000 must be paid with restricted stock that cannot be sold until the emergency government aid is repaid in full.
In 2010, Citigroup achieved its first profitable year since 2007. It reported $10.6 billion in net profit, compared with a $1.6 billion loss in 2009. Late in 2010, the government sold its remaining stock holding in the company, yielding an overall net profit to taxpayers of $12 billion.
The NY Times (Nov 2011)

In October 2011, Citigroup agreed to pay $285 million to settle charges that it misled investors in a $1 billion derivatives deal tied to the United States housing market, then bet against investors as the housing market began to show signs of distress, the Securities and Exchange Commission said.
On Nov. 28, a federal judge in New York threw out the settlement, saying that the S.E.C.’s policy of settling cases by allowing a company to neither admit nor deny the agency’s allegations did not satisfy the law.
The judge, Jed S. Rakoff of United States District Court in Manhattan, ruled that the S.E.C.’s settlement is “neither fair, nor reasonable, nor adequate, nor in the public interest” because it does not provide the court with evidence on which to judge the settlement.
Citigroup was charged with negligence in its selling to customers a billion-dollar mortgage securities fund, known as Class V Funding III. The S.E.C. alleged that Citigroup picked the securities to be included in the fund without telling investors, claiming that the securities were being chosen by an independent entity. Citigroup then bet against the investments because it believed that they would lose value, the S.E.C. said.
Investors lost $700 million in the fund, according to the S.E.C., while Citigroup gained about $160 million in profits.

Three years after needing a federal bailout to survive, Citigroup reported its seventh-straight quarterly profit, with a 74 percent rise in the third quarter despite dismal results of its investment bank.
Citigroup announced a profit of $3.8 billion, or $1.23 a share, beating analyst consensus estimates of 81 cents per share. The bank had reported a $2.2 billion profit, or 72 cents a share, a year ago in the third quarter.

"They got bailed out & we got sold out" 

1 comment:

Life As I Know It Now said...

This is a typical screwing of we the people.