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Citigroup And Boa Will Throw A Monkey Wrench In The Stimulus

Noam Scheiber is right about the Citigroup numbers, and investors have seen it right from the start. Puffed up as a big quarterly gain, the report resulted in a sharp down on the Dow, S&P and the NASDAQ. Then came the Bank of America earnings disclosures, even bigger than at Citigroup.  And the stock indices fell further. At 2 p.m. as I write, each of the markers is heading south, down about 4%, not a small decline.

Investors can now read much-hyped returns for the losses they disguise. The skepticism over accounting hi-jinx is by now endemic. But in the cases if Citigroup and Bank of America, there is another big draught of chilling news about to hit just as spring comes into its own.

Citigroup and Bank of America are the biggest owners of credit card business in the world. We still don't know, however, how much consumer debt they still carry as assets. When the information that much of this is actually bad debt another calamity will occur.

The two banks are apparently about to close out a huge percentage (I don't know exactly how much) of their card holders as bad risks. Which will further lower their spending...and their borrowing. Their stocks will fall further, and monkey wrench will have been thrown into the stimulus package.