Citigroup worries mount, shares tumble 23 percent

NEW YORK (Reuters) - Citigroup Inc faced growing uncertainty on Wednesday about whether it will rebound from punishing losses, as investors drove the stock below $5, its lowest level since a government rescue in November.

More bad news is expected on Friday, when the bank plans to report quarterly results, six days ahead of schedule, and analysts are looking for a fifth straight multibillion-dollar loss. The bank is also widely expected Friday to provide details of a comprehensive downsizing designed to ensure its survival.

Rival JPMorgan Chase & Co also moved up its earnings report by six days to Thursday.

Once the world's largest bank, but now No. 3 in just the United States, Citigroup is expected to shrink by about one-third as it focuses on corporate, investment and retail banking and trims trading operations, a person familiar with the plan said.

Citigroup will also put unwanted businesses and assets into a separate structure, with an eye toward their eventual sale, the source said.

The U.S. Treasury Department has pumped $45 billion of taxpayer funds from the Troubled Asset Relief Program, including $20 billion on November 23, when the government agreed to a bailout, sharing in bank losses in exchange for preferred stock and warrants.

The bailout helped avoid a collapse on the heels of the Lehman Brothers Holdings Inc's bankruptcy on September 15.

"I really don't know how the unraveling finishes," said Henry Asher, president of Northstar Group Inc in New York. "It looks like the government is forcing a controlled descent, without going the full monty as it did with Lehman."

In a memo to employees, Chief Executive Vikram Pandit said the bank is ready to release earnings on Friday, with "no need to wait" another six days.

Pandit, who turned 52 on Wednesday, also said while Citigroup's goals include a streamlining of operations and strengthening of its balance sheet, "We are and will remain a bank." He said the bank faces a "long-term transformation."

Shareholders have shown little patience. Citigroup shares fell $1.37, or 23.2 percent, to $4.53 Wednesday as trading volume topped 510 million shares.

Other bank stocks also declined, including larger rivals Bank of America Corp and JPMorgan, which fell 4.2 percent and 1.7 percent, respectively. The 24-member KBW Bank Index .BKX slid 6 percent and touched a 13-year low.


Getting rid of major assets marks an about-face for Pandit, who wanted to shrink the bank while keeping large parts of the "financial supermarket" model promoted by Sanford "Sandy" Weill, who created Citigroup in a 1998 merger.

On Tuesday, Citigroup said it will combine its Smith Barney brokerage and other units with Morgan Stanley's wealth management unit. Morgan Stanley will pay $2.7 billion and take a 51 percent stake in the joint venture, and can buy the rest after five years.

While the transaction will bolster Citigroup's balance sheet and result in a $5.8 billion gain, the decline in the stock resembled the downdraft on November 17-21, the week before Citigroup got the second TARP infusion. Shares fell 60.4 percent that week.

"We continue to be concerned that weakness in Citigroup's share price may lead to lack of customer (or government) confidence," Barclays Capital analyst Jason Goldberg wrote on Wednesday.

There has been a drumbeat of analysts' questions about whether regulators or Citigroup directors and executives will give Pandit time to finish the job.

"Regulators are concerned about the quality of the management that got us where we are in the banking industry," said Nancy Bush, an independent banking analyst and managing member of NAB Research LLC. "At Citigroup, the government has far more influence than on any other bank in the industry, and that's why there may be more force to bear there."


Pandit became CEO in December 2007, inheriting many problems from predecessor Charles Prince.

The bank has reported $20.3 billion in net losses, and taken more than $64 billion in credit losses and writedowns since Pandit took over.

Critics have said Pandit, known from his days as a top Morgan Stanley executive as a brilliant but cautious leader, was not aggressive enough in tackling the morass that Citigroup's $2 trillion-plus balance sheet had become.

Citigroup's ability to spin off assets may be limited. "We question where the buyers will come from, since few are both large enough and strong enough," wrote David Trone, an analyst at Fox-Pitt Kelton Cochran Caronia Waller. He rated Citigroup shares as "in line."

Ten analysts who issued estimates over the last week look for a fourth-quarter loss of 94 cents per share, on average, according to Reuters Estimates.

The annual cost of protecting $10 million of Citigroup debt against default for five years rose to $410,000 on Wednesday from $265,000 Tuesday, according to Phoenix Partners Group.


Gavin McInnes broke the internet last month when his live show was interrupted, and it appeared that he was arrested. He broke the internet again a few weeks later when he admitted that the arrest was staged as part of what was intended to be an elaborate prank.

McInnes joined Glenn Beck on "Glenn TV" to explain the real reason behind his disastrous prank.

"This was a $10,000 joke. I lost 100 subscribers because of it, but I was going away to Paris for a week because my daughter is going to college and I thought let's make it interesting," McInnes said of his decision to fake an on-air arrest in the middle of his live "Get Off My Lawn" podcast on August 25.

"There was a method to the madness, with the prank ... my point was, first of all, this is happening to people in real-time. Tim Poole has been swatted a million times," he explained to Glenn. "The thought police are in full effect. I also wanted to lampoon the media's bloodlust for us suffering."

Glenn played a clip of the now-infamous hoax while McInnes explained what was really going on behind the scenes, including how his very drunk friend "Unrelia-Bill" was supposed to act the part of the arresting officer but ended up being much too intoxicated (at "2 pm") to speak even a few lines, and how smugly gleeful the "far left" was when they thought McInnes had actually been arrested.

Watch the video clip below to catch more of the conversation:

Want more from Glenn Beck?

To enjoy more of Glenn’s masterful storytelling, thought-provoking analysis, and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution, and live the American dream.

Glenn Beck joined Fox News' Tucker Carlson on Thursday night to discuss Visa Inc.'s "horrifying" new plans to flag firearm sales by separately categorizing purchases at gun shops, a move that Glenn aptly described as "the next step in banning guns."

In what's been hailed as a major victory for gun control activists, Visa agreed to adopt the International Organization for Standardization's (ISO) new set of standards by creating a special merchant category code for gun and ammunition sales.

In his appearance on "Tucker Carlson Tonight," Glenn shared a letter written by Robert B. Thomson III, a senior vice president at Visa, showing that the credit card company initially pushed back on the ISO's new rules.

“We believe that asking payment networks to serve as a moral authority by deciding which legal goods can or cannot be purchased sets a dangerous precedent,” Thomson wrote in the letter to pro-gun-control lawmakers, including Democratic Sen. Elizabeth Warren of Massachusetts.

Just days later, however, Visa had agreed to comply with the ISO's plan to establish a new merchant category code for gun stores. So why did Visa suddenly flip?

As Glenn explained, it all comes down to pressure from America's largest union-owned bank, the Amalgamated Bank, one of the only unionized banks in the United States and a proud proponent of ESG (Environmental, Social, and Governance) investing.

"This is the next step in banning guns," Glenn asserted.

"It's horrifying!" Tucker responded after several seconds of stunned silence.

"I'm so grateful you did the reporting on this," he told Glenn. "I'm not sure why it falls to you since we have a couple of very large daily newspapers in this country you'd think would want to report this, yet none of them did. So, Glenn Beck did."

On a recent episode of "The Glenn Beck Program," Glenn broke down the details of this latest attack on the Second Amendment and revealed how this is a step toward something even worse than federal gun registration. Watch the video clip below for more details. Can't watch? Download the podcast here.

Want more from Glenn Beck?

To enjoy more of Glenn’s masterful storytelling, thought-provoking analysis, and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution, and live the American dream.

Glenn Beck: Here's why Stacey Abrams' fetal heartbeat remarks are hilarious but TERRIFYING

(Left) Image source: video screenshot/ (right) Photo by Marcus Ingram/Getty Images

Georgia Democratic gubernatorial candidate Stacey Abrams has a new pro-abortion conspiracy theory: "There is no such thing as a [fetal] heartbeat at six weeks ... it is a manufactured sound designed to convince people that men have a right to take control of a woman’s body."

On the radio program Thursday, Glenn Beck and producer Stu Burguiere agreed Abrams' latest "misinformation" is not just ridiculous but could be dangerous if people are actually willing to believe her.

"If you want to defend abortion, go ahead and defend it. Defend what you're actually doing. Stop denying what is reality," Stu said. "If this is such a great defensible policy, then just come out and defend it, but they never can ... you notice how they can't go to the actual thing they say is so important. They keep defending these other things that aren't true."

Glenn said the pro-choice movement was successful for a long time because most people want the decision to be up to the woman and her doctor and that abortion should be safe, legal, and rare. But when leftists began "celebrating" their abortions or calling for "abortion on demand" at any point in the pregnancy, that's when they start to lose support.

"Because they've celebrated abortion and are losing regular people, you can't put that genie back in the bottle. So, what do they have to do now? They have to take the insane step of discrediting medical machines and technology," Glenn said.

"This is after two years, by the way, of them claiming the biggest scandal in the world was people suggesting the voting machines were hacked — after they previously said that voting machines were hacked in elections they [Democrats] lost," Stu pointed out.

"Honestly, gang, think this through because this is where life gets very scary. This is where you go to authoritarian rule and you can kill millions of people because you're truly now discrediting things that everyone knows is true," Glenn warned.

"So, if you disagree ... you can say that is an evil magic box that has made up sounds in it to convince people. If they will buy that, you're at the Salem witch trials. 'If she doesn't float, she wasn't a witch.' That's what you're looking at right now — and what's frightening is, [Abrams] can say this with a straight face and no one discredits her," he continued.

"You don't think that they can convince those people that you are a terrorist because of the way you vote? [...] You don't think they can convince half the country that you should be eliminated, liquidated, put into a camp, whatever authoritarians love to do? ... We are headed towards dangerous, dangerous times. We better wake up and stand together because this is frightening — it's hilarious — but because people are taking it seriously, it is terrifying," Glenn added.

Watch the video clip below to hear more from Glenn. Can't watch? Download the podcast here.

Want more from Glenn Beck?

To enjoy more of Glenn’s masterful storytelling, thought-provoking analysis, and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution, and live the American dream.

A big question Glenn Beck has always had about “The Amazing Do-Over” is: How do you get the most powerful and wealthy nation that has ever existed to accept, “You will own nothing … and be happy”? A foundational principle of this country from its very inception has been land ownership. We worked hard, were fiscally responsible, and stayed away from high debt, but the progressive era began to erode all of that.

The Clinton Global Initiative recently gathered the ruling class to tell the plebes how to run their finances and called anyone who dared challenge their ideas “climate change deniers.” Glenn argues we are dangerously far down the “Road to Serfdom” and exposes the progressive playbook to keep us in line. It’s a 600-year-old medieval model that’s been the plan all along.

We’re already feeling economic pain, and yet they’re playing “Game of Thrones” with our lives. Turning us into serfs is their ultimate goal. How do they finish the complete restructuring of the American financial system and our way of life?

On Wednesday night's "Glenn TV," Glenn connects it all on the chalkboard and details the solution to fighting back against the ruling elites.

Watch the full episode below:

Want more from Glenn Beck?

To enjoy more of Glenn’s masterful storytelling, thought-provoking analysis, and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution, and live the American dream.