Did accounting changes just before the issuance of the strongly positive 1st quarter profit reports have an effect?
After Year of Heavy Losses, Citigroup Finds a Profit [NY Times]
Citigroup, the battered banking giant, eked out a first-quarter net profit on Friday after more than a year of staggering losses and three bailouts from Washington, but used an accounting adjustment to do it.
The New York-based bank reported first-quarter net income of $1.6 billion, after a loss of $5.11 billion in the period a year earlier. <
> The results were also helped by an accounting adjustment that allowed the bank to post a one-off gain of $2.5 billion on its derivative positions.
So, check my math here, a $1.6B profit minus the one-off gain of $2.5B equals a -$0.9B shortfall, a $900,000 loss, yes?
Seen over at both Rafé and Susan’s [via Megan McArdle] blogs:
In a guest post at the Freakonomics blog, economists Doug Diamond and Anil Kashyap explain the current financial crisis in FAQ form. For example, here’s the nut of the problem with Fannie and Freddie:
Fannie and Freddie were weakly supervised and strayed from the core mission. They began using their subsidized financing to buy mortgage-backed securities which were backed by pools of mortgages that did not meet their usual standards.
Elsewhere at the New York Times, Paul Krugman explains why the bailout plan the Treasury Department is floating is a bad idea: see No deal and Thinking the bailout through.
We live in interesting times