[Pen-l] Now That's Leverage!

[Michael Perelman <michael@xxxxxxxxxxxxxxxxx>]

"Tangible assets, which don't include goodwill or intangibles, are 55 times the 
bank's tangible equity .... Citi's leverage worries some investors. Furthermore, 
possibly making matters worse are proposed accounting-rule changes that, if adopted, 
will prompt banks in 2010 to bring some off-balance-sheet assets back onto their 
books.

Tangible assets rise to nearly 59 times tangible equity if Citi has to bring about 
$120 billion in credit-card assets back onto its books in 2010, as is likely. Citi 
also may have to consolidate some of the roughly $670 billion in mortgage assets 
currently held by off-balance-sheet vehicles.

If the bank had to consolidate just 20% of these mortgage assets, tangible assets 
would rise to about 63 times tangible equity.

Reilly, David. 2008. "Job Losses Won't Cut It for Citigroup." Wall Street Journal 
(18 November): p. C 10.



-- 
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael at ecst.csuchico.edu
michaelperelman.wordpress.com
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