Citigroup has successfully plead the case for a US$20 billion bailout (and US$306 billion in loan guarantees) from the US Treasury. However, if the situation at Citi is that dire (and evidence suggests it is), they are mandated to disclose that damage to their investors mid-quarter. They haven’t, and the government doesn’t seem to mind.
Jonathan Weil makes the case in an op-ed for Bloomberg:
Let’s say a company’s board or management concludes mid- quarter that big charges to earnings are needed to write down impaired assets. Under the Securities and Exchange Commission’s rules, that must be disclosed within four business days in an SEC filing. If the size can’t be determined, disclosure is still required; the company just has to say it’s unable to make a good-faith estimate of the amount.
It’s been more than a week since Citigroup reached its Nov. 23 welfare deal with the government. Since then, it has made no such disclosure filing, though it did issue a press release on Nov. 19 divulging $1.1 billion of new investment losses.
That leaves a couple of possible explanations. Somehow, the people running Citigroup have imagined a way to avoid concluding that massive writedowns are needed, even after determining the bank might not survive without another bailout. Or — and here’s the odds-on favorite — Citigroup’s bosses operate as if the rules don’t apply to them.
Full op-ed: Citigroup Needs to Confess Its Writedowns Now
— Jonathan Eyler-Werve