The Masters of the Universe are STILL hiding their assets and liabilities!!! You'd think that they would voluntarily come clean about all the crap they've conveniently put "off the books" but old habits are hard to break. Where is the FASB on this farce?
Citigroup's $1.1 Trillion of Mysterious Assets Shadows Earnings
By Bradley Keoun
July 14 (Bloomberg) -- At an investor presentation in May, Citigroup Inc. Chief Executive Officer Vikram Pandit said shrinking the bank's $2.2 trillion balance sheet, the biggest in the U.S., was a cornerstone of his turnaround plan.
Nowhere mentioned in the accompanying 66-page handout were the additional $1.1 trillion of assets that New York-based Citigroup keeps off its books: trusts to sell mortgage-backed securities, financing vehicles to issue short-term debt and collateralized debt obligations, or CDOs, to repackage bonds.
Seven of the biggest U.S. banks, including Citigroup, are on the hook for at least $300 billion of credit and liquidity guarantees for off-balance-sheet loans and bonds, according to a June 30 report from consulting firm RiskMetrics Group Inc. in Rockville, Maryland.
``You will rapidly realize what a farce these off-balance- sheet things are,'' said Ladenburg Thalmann & Co. analyst Richard X. Bove. ``You could pick up a lot of loan losses with the stuff you're putting back on.''
I have to give the FASB some credit - it is trying to eliminate this trick:
The Financial Accounting Standards Board, the five-member panel in Norwalk, Connecticut, that sets U.S. accounting rules, voted earlier this year to eliminate ``qualifying special- purpose entities,'' or QSPEs, a category of off-balance sheet financing exempted from tighter standards enacted following the collapse of U.S. energy trader Enron Corp. FASB also plans to clamp down on ``variable interest entities,'' or VIEs, that banks used when their vehicles couldn't qualify as QSPEs. And it voted June 11 to force banks to consolidate off-balance-sheet assets whenever an ``obligation to absorb losses can potentially be significant.''
The Masters of the Universe don't like this because THEY WOULD HAVE TO HIRE MORE ACCOUNTANTS!!!
The comments came after Robert Traficanti, Citigroup's deputy controller, sent a letter to FASB Chairman Robert Herz on June 9 objecting to a provision that would force banks to reevaluate their off-balance-sheet assets and liabilities every quarter. Citigroup has more than 7,000 VIEs and more than 100 QSPEs, he wrote.
``We believe that this model is impractical from an operational standpoint,'' Traficanti wrote. ``We would not be able to perform this analysis given the resources we currently have. We would need to hire many more accountants.''
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