Bad news from Citigroup, too
Citigroup reported that third-quarter profits will probably drop 60 percent. Amy Scott explains what got them there, and reports that the worst might not be over.
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Scott Jagow: But of course, the U.S. banks are by no means immune. I said two banks had some bad news this morning. The other one is Citigroup. It said third-quarter profits will probably drop 60 percent. Amy Scott has more on that story.
Amy Scott: Citigroup wrote down almost a billion and a half dollars in leveraged loans. Those are loans made to companies already saddled with debt.
The bank also lost more than a billion dollars on securities backed by subprime mortgages. The value of those securities has plummeted, as investor demand for risky credit has dried up.
And banking analyst Dick Bove with Punk Ziegel says the worst isn't over:
Dick Bove: I think that Citigroup, Bank of America, JP Morgan, Wachovia, as well all the big brokers and Merrill Lynch are gonna be taking write-offs of this nature for a while.
Citigroup is also dealing with a weaker consumer credit market.
Chief executive Charles Prince called the earnings a "clear disappointment." The bank doesn't officially report its third-quarter earnings for a few weeks. But Bove says banks often warn investors of trouble ahead of time.
In New York, I'm Amy Scott for Marketplace.
