Swelling Write-Downs

[Ex-SD]

Citigroup’s subprime exposure — and source of its problems — is found in two big buckets that together total $55 billion in its securities and banking unit, the bank said. The first bucket totals $11.7 billion, including securities tied to subprime loans that were being held, or warehoused, until they could be added to debt pools for investors. The second, totaling $43 billion, covers so-called super-senior securities.

Entire story here: http://online.wsj.com/article/SB119422328485282002.html?mod=home_whats_news_us

[asragov]

There is some good analysis over at Calculated Risk (“More Citi”):

http://calculatedrisk.blogspot.com/2007/11/more-citi.html

and the NY Times (“Bankers’ Lesson from Mortgage Mess”):

If you really want it from the primary source, you can listen to the conference call here:

http://biz.yahoo.com/cc/9/87359.html

There are some very unclear issues here:

– are the rating agencies marking down beyond what the underlying cash flows warrant?

– how does the valuation of the underlying collateral affect the valuation of the securities?

– how do you react to market behavior that is unprecedented?

– how effective are / would be hedges to this exposure?

I would open it up to discussion; my impression is that this is a company that is not being completely forthright about its risks. The questioners seemed to have better questions than the company had answers.

[asragov]

There is some good analysis over at Calculated Risk (“More Citi”):

http://calculatedrisk.blogspot.com/2007/11/more-citi.html

and the NY Times (“Bankers’ Lesson from Mortgage Mess”):

If you really want it from the primary source, you can listen to the conference call here:

http://biz.yahoo.com/cc/9/87359.html

There are some very unclear issues here:

– are the rating agencies marking down beyond what the underlying cash flows warrant?

– how does the valuation of the underlying collateral affect the valuation of the securities?

– how do you react to market behavior that is unprecedented?

– how effective are / would be hedges to this exposure?

I would open it up to discussion; my impression is that this is a company that is not being completely forthright about its risks. The questioners seemed to have better questions than the company had answers.

[asragov]

There is some good analysis over at Calculated Risk (“More Citi”):

http://calculatedrisk.blogspot.com/2007/11/more-citi.html

and the NY Times (“Bankers’ Lesson from Mortgage Mess”):

If you really want it from the primary source, you can listen to the conference call here:

http://biz.yahoo.com/cc/9/87359.html

There are some very unclear issues here:

– are the rating agencies marking down beyond what the underlying cash flows warrant?

– how does the valuation of the underlying collateral affect the valuation of the securities?

– how do you react to market behavior that is unprecedented?

– how effective are / would be hedges to this exposure?

I would open it up to discussion; my impression is that this is a company that is not being completely forthright about its risks. The questioners seemed to have better questions than the company had answers.

[asragov]

There is some good analysis over at Calculated Risk (“More Citi”):

http://calculatedrisk.blogspot.com/2007/11/more-citi.html

and the NY Times (“Bankers’ Lesson from Mortgage Mess”):

If you really want it from the primary source, you can listen to the conference call here:

http://biz.yahoo.com/cc/9/87359.html

There are some very unclear issues here:

– are the rating agencies marking down beyond what the underlying cash flows warrant?

– how does the valuation of the underlying collateral affect the valuation of the securities?

– how do you react to market behavior that is unprecedented?

– how effective are / would be hedges to this exposure?

I would open it up to discussion; my impression is that this is a company that is not being completely forthright about its risks. The questioners seemed to have better questions than the company had answers.

[Bugs]

I’m sure the company has all the right answers. We’re just not ever going to see them.

[Bugs]

I’m sure the company has all the right answers. We’re just not ever going to see them.

[Bugs]

I’m sure the company has all the right answers. We’re just not ever going to see them.

[Bugs]

I’m sure the company has all the right answers. We’re just not ever going to see them.

[Author]

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