Goldman Sachs has downgraded Citigroup, the nation's largest bank, estimating that it will have to take a $15 billion hit due to its exposure to the subprime meltdown. Two weeks ago, Citigroup estimated that its mortgage related write-downs would total from $8-$11 billion as its CEO, Charles Prince "resigned."

Goldman analyst William Tanona wasn't thrilled with Citigroup's decision to pink-slip its CEO:
"The lack of leadership at this point in Citi's storied history could not have come at a worse time," Goldman analyst William Tanona wrote in a note to clients. "With deteriorating consumer and housing metrics, Citigroup is facing mounting pressure across many businesses." Citigroup's stock is down 39% on the year, and Tanona fears that the subprime debacle may be spreading to the consumer credit markets:
Goldman estimated Citigroup will have to book $15 billion in write-downs over the next two quarters related to its $43 billion in exposure to complex securities called collateralized debt obligations. Citigroup already has said it expects to see a loss of $8 billion to $11 billion on those positions. Goldman expects the bank to take the full $11 billion hit and then another write-down of $4 billion in the first quarter, an estimate based on weakness in indices that serve as proxies for the value of mortgage-related securities.

The situation isn't very sunny outside of the investment-banking unit, either. Citigroup will feel "the pain" of a worsening consumer-credit environment in its retail banking and cards divisions, the Goldman note said. Gosh. It sounds like Citi needs a hug.
Citibank's chairman and CEO Charles Prince announced his resignation Sunday, citing the subprime meltdown as the reason for his departure.

"It is my judgment that given the size of the recent losses in our mortgage- backed securities business, the only honorable course for me to take as chief executive officer is to step down," Prince said in a statement issued by Citigroup. "This is what I advised the board." An interim CEO has been chosen as the nation's #1 bank faces up to $11 billion in additional subprime writedowns.

Which CEO will the subprime meltdown take next?

Citibank downgraded by analysts. "They don't have enough capital, pure and simple," says one. "They will have to address that, ASAP." The subprime meltdown rolls on.[After reading our posts about getting your credit card APR lowered by threatening to do a balance transfer to a lower rate credit card, Brandon got his Citibank Mastercard APR lowered from 15.74% to 1.99%. It's an introductory rate that goes up to prime plus 4.99% after a year, but it's definitely worth it for the time being. A factor that probably helped him was the $10,000 balance he was carrying, making his business more valuable to Citibank.

Writes Brandon, "They probably saw the ten thousand dollar balance and figured it was worth it not knowing that 3/4 is tuition that the company pays back next month."

Shop around first for a lower rate card first so you can throw out names and numbers of better offers. If they call your "bluff" and don't budge, then it will probably make sense to do the switch anyway.

(Photo: Reader Jim writes:
Consumerist,

Citicards is losing my business. In the process of buying my house, I was buying many large purchases - window treatments, washer and dryer, and other things you never think of. As I expected, Citi got a little suspicious of this activity. Instead of calling me and asking about them, they just started rejecting charges outright. That's embarrassing to say the least. I called and asked them if they would put all the charges through, and to expect more because I was buying a house. They told me that all my charges would go through.

Cut to this past weekend while I'm waiting at home for my washer and dryer to be delivered. After waiting all morning I call Best Buy to get an update, and they tell me that the credit card company canceled my order. I call Citi back, and they have no record of that order or of canceling it. I assure them that I did order it, I have the receipt, and they did cancel it, and they proceed to argue with me. Then, of course, I get the obligatory sales pitch when I'm trying to get rid of them.

Needless to say, I'll be canceling my Citicard as soon as my balance is paid off. This is the second time this has happened to me or my wife, and it is two times too many.

Thanks,
Jim Jim just sent us an update. He still doesn't have his appliances. I'm still trying to get this sorted out. I've talked to them numerous times, and they still have canceled numerous transactions. Supposedly, there's a note on my account saying that I authorized high priced purchases (like a washer and dryer), but every time I talk to someone, it's like they haven't spoken to me ever. "Fraudulent activity" had no idea that I had talked to customer service twice already the same day. What a bunch of crap. It's nice to know your credit card company is watching out for fraud, but if this is how disorganized they are when nothing is wrong—imagine how much fun they'll be to deal with if something "bad" does happen. We'd get another card if we were you. There are some lovely deals to be had when transferring balances.

(Photo:cmorran123)

Confessions Of A Campus Credit Card Pimp [Debt]

Here are two of the things a former Citibank credit card pusher told college students to get them to sign up:"Even if you apply, you can always cut up the card," and "It's easy to pay off your balance once you graduate and get a great job."The ex-app jockey even fell pray to his own patter. One signup shy of a cash bonus, he filled out one for himself. Five years later, he's $13