Business Insight Zone

Enough with my Chuck Prince bashing — Citigroup’s problems may go well beyond who’s holding the top job:

Credit Crunch: More To Come

[Citigroup's] shares fell more than 7% at one point, after an analyst said Citi needed to raise $30 billion in capital, possibly by cutting its dividend, and raised concerns about the firm’s bloated balance sheet.

The note by Meredith Whitney of CIBC World Markets supports the argument that banks are maintaining inadequate capital levels given the risks they are assuming on their trading books, particularly in their out-sized exposures to the credit derivatives that have gone haywire in the recent market tumult.

The same story talks about the hocus-pocus “Level 3″ assets of Goldman Sachs and Merrill Lynch. For more on the kooky world of Level 3, I refer you back to this post from August, and especially its link to this bit from the estimable Marc Andreessen.

More details on Citi’s woes here:

Citi: That Sinking Feeling

We’ve got a long, long way to go — and, I’m afraid, many painful lessons yet to learn — before we get to the bottom of this credit crunch.

Category: Finance & Real Estate