CitiGroup, Black Hole Of American Finance
But here is the black hole of American finance: Goodwill can only be written off against profits. But Citigroup has no profits and has no reasonable expectation of profits. Therefore, the Treasury is encouraging Citigroup to engage in accounting fraud-
[Post Election: Financial Meltdown]
Citibank has become the black hole of American finance-it just sucks up America's money and spews forth radiation.
On Wednesday I logged onto Yahoo Finance and downloaded a copy of Citigroup's 2007 Annual Report. I had attempted to download a more recent financial submission to the SEC, but was thwarted because I do not subscribe to EDGAR.
But even though Citigroup's 2007 Annual Report is out of date, there was some very interesting information on page 147 of the annual report. Under the heading Goodwill and Intangible Assets, is a table that explains how much money Citigroup overpaid for its acquisitions in 2007; after Citigroup knew that its banking model was collapsing.
From 2006 to 2007 Citigroup increased its "goodwill," the amount Citigroup overpaid for acquisitions, from approximately $33 billion to $41 billion.
Interestingly Citigroup did write off $516 million of this amount- the amount of goodwill Citigroup paid to purchase Vikram Pandit's Old Lane hedge fund so that Pandit would become chief executive officer of Citigroup.
Pandit reaped approximately $160 million in profit from Citigroup in this deal.
But what is interesting to note is that Citigroup was expanding when Citigroup knew that it was in dire straits. But here is the black hole of American finance: Goodwill can only be written off against profits. But Citigroup has no profits and has no reasonable expectation of profits.
Therefore, the Treasury is encouraging Citigroup to engage in accounting fraud-by not demanding that Citigroup immediately write off approximately $40 billion in goodwill. According to FASB 142, goodwill must be written off against earnings. But Citigroup has no earnings. The goodwill must be deducted as a loss to net income (loss) immediately.
Why this charade with Citigroup? Because Treasury does not wish the American public to know that Treasury is complicit with Citigroup's massaged earnings.
No Record Exist!!