Friday, March 07, 2008

Stanford Review : Ben Stein Interview ....

Interesting Extract:

The Standard Review: Recently, Singapore, South Korea, and Kuwait bought a $21 billion stake in Citigroup and Merrill Lynch. What is your opinion on sovereign wealth funds and their impact on the U.S. economy?
Ben Stein: Well, I think if these guys (sovereign wealth funds) are wise investors, it’s fair, but they should be aware that Wall Street generally goes to foreigners when it can’t sell a deal at home. They (Wall Street) would rather sell a deal at home. So, that’s something that foreigners should be aware of: if it’s a really good deal, they (American firms) would probably sell at home.


yamizi said...

肥水不流外人田 - old chinese sayings

Anonymous said...

IHT Wednesday, March 5, 2008

Confidence at Citigroup, skepticism on Wall Street
By Eric Dash

NEW YORK: Sanford Weill built Citigroup into one of the world's largest banking companies. Now, Vikram Pandit is watching Weill's creation wither in the stock market.
Reflecting a punishing yearlong decline, Citigroup's stock price plummeted Tuesday to its lowest level since 1998, when Weill formed the financial conglomerate through the merger of Travelers and Citicorp.
The shares sank 99 cents, or 4.3 percent, to $22.10, as concern spread that new multibillion-dollar losses might force Citigroup to go hat in hand to foreign investors once again. The market tumble left Citigroup shares down 56 percent in the past year, the worst showing among the 30 stocks that make up the Dow Jones industrials.
For now, executives say they are confident that the company is financially strong. On Tuesday evening, Pandit told employees on an internal conference call that Citigroup was "well capitalized," according to a person close to the company.
The bank has no plans to seek money from outside investors, another person close to the company said. Since November, Citigroup has raised about $30 billion from investors in Asia and the Middle East, as well as from the public.
But those investments may not be enough to shore Citigroup up, some investors fear. Sameer al-Ansari, the head of Dubai International Capital, a government-controlled investment fund, told Reuters on Tuesday that Citigroup might need "a lot more money."
Adding to the gloom, two new reports by analysts forecast Tuesday that Citigroup's troubles would continue this quarter. Merrill Lynch predicted that Citigroup would take $15 billion in write-downs because of bad mortgage investments, leaving it with a net loss of $1.66 a share. Goldman Sachs estimated Citi's loss at $1 a share.
Since becoming chief executive in December, Pandit, 51, has reconfigured the sprawling structure of Citigroup but has not made the radical overhaul that many investors called for. On Monday, for example, he announced a reorganization of the company's wealth-management business.
But investors and analysts say Pandit needs to take far bolder steps to turn around the bank, which has been pummeled by the turmoil in the credit markets. Some have urged him to break up the company, saying Citigroup has become too unwieldy to be managed effectively.
Pandit, like his predecessor, Charles Prince III, has resisted that step.
Pandit now confronts growing doubt about his leadership and management team at a time of uncertainty in the financial markets and the economy. "There are a lot of balls in the air for Vikram Pandit," said David Hendler, a financial services analyst at CreditSights in New York. "Pretty soon, that 100-day honeymoon is going to be over. In the meantime, they may have to act."
Citigroup's capital levels came under scrutiny in October when Meredith Whitney, now a banking analyst at Oppenheimer, issued a scathing report saying the company's weakening finances would force it to cut its dividend, sell assets and issue new stock. At the time, Citigroup executives brushed off those ideas. By the end of 2007, they were heeding Whitney's advice.
On Tuesday, the person close to Citigroup said the company was strong enough to maintain its dividend, which costs the company about $6 billion annually. Still, that leaves open the possibility that the board may elect to cut the dividend.
Citigroup says it has more than enough capital to meet regulatory guidelines and its own internal benchmarks. The bank is in the process of raising several billion dollars by selling assets from several smaller fringe businesses and has pulled back from some domestic and international markets. It will also free up several billion dollars as the number of loans on its books shrink.
Citigroup executives have said that the bank is strong enough to withstand more shocks, including a further decline in the value of subprime mortgage investments and buyout loans, potential downgradings of bond insurance companies and big consumer-loan losses.
"The exposures to these areas were stress-tested against an economic downturn with a variety of severity levels," Gary Crittenden, the chief financial officer, said in a conference call with investors in January. Taking all the factors together, he said, the company had addressed a potential capital shortfall.
Still, many analysts question whether Citigroup has the earnings power to withstand the heavy losses that might come with a severe economic slump.
"They might as well fess up and admit they need to raise a big chunk of money," said Christopher Whalen, managing partner of Institutional Risk Analytics. "The issue with Citi is all the coming consumer credit losses."