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To: Jim McMannis who wrote (111903)	3/20/2008 8:34:31 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 306849

Citibank is them. . RE:"The Great Unwind has begun, Citigroup warns. Avoid leveraged companies, countries and consumers, bank's strategists say" The question is whether Citibank has avoided them.

To: Jim McMannis who wrote (111903)	3/21/2008 1:53:30 PM
From: GraceZ	Respond to of 306849

The question is whether Citibank has avoided them Got the semi-annual report for the money market fund one of my husband's accounts uses, The Reserve, Primary, Government and Treasury funds, and started reading it for fun last night. What is comical is that on the first page the Chairman and CEO of Reserve writes about how far money managers who manage cash funds have strayed from the principle of capital preservation and have ventured out on the risk curve and how they have stuck with their principles of conservative cash management. Then of course you look through the holdings and see 1.45 billion in Bear Stearns RPs (collateralized with ABS and CMOs) and half a billion in CitiBank RPs collateralized with MNI (I had to look it up, they are unsecuritized mortgage interest strips) and TRR (trust receipts). This was in the "Primary" fund. In the "Government" fund they had another 1.2 in Bear Stearns RPs along with a hellova lot more in every variety of Fannie and Freddie strip out. Mind you this is a money market fund, one of the first and one of the largest money market funds, this is not some high yield bond fund where one expects to see this type of security.

To: Jim McMannis who wrote (111903)	3/22/2008 12:03:25 PM
From: butschi2	Respond to of 306849

"The question is whether Citibank has avoided them." Perhaps Citi should have avoided itself ;) Citi is totally leveraged with a very opaque balance sheet, a lot of Level 3 assets, a bunch of derivatives, bad management and to much loans to the leverage community with a lot of losses if the leverage entities must deleverage or even collapse. On top of this Citi has a lot of bad assets like LBOs,CRE, or RMBS/CDO assets, which have fallen in value like a rock in the last quarter. I expect here more hiding in Level 3 or a big capital infusion. I would bet on Citi in need of a lot more capital down the road or even a government bailout. Mark-to-Market Citis balance sheet should be dust, but Citi like many other banks will move assets from Level 1 -> Level 2 -> Level 3 to stretch the losses over time.