By MICHAEL GRAY
I’m not one for gossip or gotcha, but I have heard this from numerous sources and have no way of confirming it from the federal government prosecutors, but I think you should know it could have an effect on the markets.
Which fair-haired investment banking CEO is allegedly on the same call girl client list as former NY State Governor Eliot Spitzer?
This news, if confirmed, could take this important bank to the brink in these troubled times.
Citi Springs a Leak
So CEO Vikram Pandit leaks an internal memo writing to staff that the last two months have been profitable for the bank.
The memo is not subject to any regulatory obligations, which is exactly why it was said to be “leaked” so Citi can’t be sued by shareholders later on when the bank is nationalized and they are wiped out.
The Citi memo created one of the largest short-covering rallies in years. The 5 percent move in Dow and S&P was driven by financials shares soaring –– not because fundamentals changed –– but were oversold for the time being.
We will see Citi report losses this quarter on writedowns. Its too late in the quarter for Citi to sell assets to bolster the quarter, but that will start very soon.
Uncle Sam will force TARP-aided banks to sell the gems to bolster capital. Look for Banamex to go on the sale block very soon for a number of reasons.
The biggest aspect is that the Mexican government is wary of another nation (Uncle Sam through nationalization) owning its largest bank. The second impetus is that Citi can bolster its Tier-1 capital substantially in one fell swoop.
Yesterday’s actions in Citi and banking in general will be short lived and quick profits for some in the know.
For more on Wall and Washington and the cratering economy see: http://mgray12.wordpress.com