A fun thing that banks do around earnings season is start nipping and tucking themselves, accentuating the good parts of their quarterly earnings and hiding the bad. This can be accomplished in many ways: by excluding so-called “onetime charges” that have no effect on core business trends, by futzing with things called CVA and DVA that are way too boring and complicated to explain so just read this if you’re interested, and by steering analysts and reporters to the best parts of their businesses and away from the clunker divisions.
In a stunning feat, Citigroup, which reported its third-quarter earnings this morning, managed to pull off all three.
Just look at this marvelous do-si-do of bad news avoidance, via The Wall Street Journal:
Citigroup’s profit tumbled 88% as the bank took a $4.7 billion writedown related to its stake in Morgan Stanley MS +0.92% Smith Barney and a large accounting hit tied to its own debt … Excluding the writedown and DVA, Citgroup said its net income was $3.3 billion, 27% higher than the third quarter 2011 … Excluding the DVA impact, net income in Citigroup’s Securities and Banking unit rose 67% to $1.6 billion from the year earlier period.
So, except for all the stuff we lost money on, we made money last quarter! High fives and Macanudos for everyone!
The background to today’s dismal earnings is that Citigroup has been, for several years, the big-bank equivalent of Pig-Pen, that guy from the Peanuts who was followed by a cloud of dirt everywhere he went. The bank got hit hard by the financial crisis and hasn’t gotten many breaks since. It has had executives sued (unsuccessfully) for mortgage fraud, had shareholders balk at its executive pay packages, been dragged into Libor-gate, and came out on the losing end of a tête-à-tête with Morgan Stanley over the valuation of their Smith Barney joint venture. Most alarming, its five-year stock chart looks like this:
(For comparison’s sake, BlackBerry-maker Research in Motion — by many accounts a nearly failed company — has essentially the same five-year losses, and it didn’t get a giant government bailout.)
In fairness to Citigroup, some parts of its business are going well. Revenue in the bank’s investment banking and fixed-income divisions were up over last year, and the bank says it gained “wallet share” (a horrible phrase that should never be used) “in all major products and in most regions.”
Still, with its stock price and its return on equity still in the Marianas Trench, having a marginally better quarter in certain areas (excluding DVA and the MSSB writedown and whatever else Vikram Pandit thinks shouldn’t count this quarter) is only a partial victory. Most days, in most ways, it’s hard to see any other conclusion: Four years after it took a giant bailout and nearly died anyway, Citigroup is still fairly Screwed.
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Nations of the world, sans U.S., graduate to next phase of the Paris climate agreement
After two weeks of bruising negotiations, officials from almost 200 countries agreed Saturday on universal, transparent rules that will govern efforts to cut emissions and curb global warming. Fierce disagreements on two other climate issues were kicked down the road for a year to help bridge a chasm of opinions on the best solutions.
The deal agreed upon at U.N. climate talks in Poland enables countries to put into action the principles in the 2015 Paris climate accord.
But to the frustration of environmental activists and some countries who were urging more ambitious climate goals, negotiators delayed decisions on two key issues until next year in an effort to get a deal on them.
A touching story of a random friendship between an immigrant cat litter chemist and a basketball superstar
When Charles Barkley’s mother, Charcey Glenn, passed away in June 2015, Barkley’s hometown of Leeds, Alabama, came to the funeral to pay respects. But there was also an unexpected guest.
Barkley’s friends couldn’t quite place him. He wasn’t a basketball player, he wasn’t a sports figure, and he wasn’t from Barkley’s hometown. Here’s what I can tell you about him: He wore striped, red polo shirts tucked into khaki shorts and got really excited about two-for-one deals. He was a commuter. He worked as a cat litter scientist in Muscatine, Iowa. In short, he was everyone’s suburban dad. More specifically, he was my dad.
“You know, it was obviously a very difficult time,” Barkley told me recently. “And the next thing I know, he shows up. Everybody’s like, ‘Who’s the Asian dude over there?’ I just started laughing. I said, ‘That’s my boy, Lin.’ They’re, like, ‘How do you know him?’ I said, ‘It’s a long story.’ “
Why YouTube’s Biggest Star Can’t Be Canceled
By Max Read
The Impossible Job: How John Kelly Failed to Tame the West Wing
By Olivia Nuzzi
Judge Strikes Down Obamacare, but the GOP Should Hold its Applause
By Ed Kilgore
Children of Ted
By John H. Richardson
Why Donald Trump Keeps Giving Mick Mulvaney More Jobs
By Jonathan Chait
New York City tenants are still paying for Trump family’s fraudulently acquired inheritance, two decades later
The president and his siblings have long since sold their father’s buildings and moved on with their inherited fortunes. But for tenants, the insidious effects of the scheme continue to this day.
The padded invoices have been baked into the base rent used to calculate the annual percentage increase approved by the city. The sum total of the rent overcharges cannot be calculated from available records. But as way to appreciate the scope of the impact, a onetime $10 increase in 1995 on all the 8,000 apartments involved would put the total overpaid by tenants at more than $33 million to date, an analysis of approved rent increases shows.
Mr. Leitner, a retired computer programmer, was not pleased to learn that his rent had been artificially inflated. Like other tenants interviewed by The Times, he wants that money back.
“If they passed on phony costs to tenants, they should lower our rents,” he said.
One last hustle before hitting the road
While Zinke remained defiant both in public and private this month — a week and-a-half ago, he boasted that he would continue to attack his critics — Trump had little personal affection for him. The president was annoyed by a few of Zinke’s actions, including a decision in January to exempt Florida from offshore drilling in an appearance with Gov. Rick Scott (R), which was not approved in advance by the White House, and a ruling to allow imports of elephant trophies. Zinke later reversed the elephant trophy decision, after Trump publicly intervened.
The secretary’s final public appearance was Thursday night at his Christmas party, which he told White House staffers he wanted to have before his dismissal. He invited lobbyists and conservative activists to his executive suite, where he posed for photos in front of a large stuffed polar bear wearing a Santa cap, according to an attendee.
Mounted animals on the wall were fitted with ornaments.
“He still has big time political ambitions,” said one Republican with close ties to Zinke, who asked for anonymity in order to speak frankly.
The presidency continues to do wonders for the Trump brand
* Trump Org. / Bedminster Club
* Trump campaign
* Trump transition team
* Trump inaugural committee
* Trump White House
* Trump Foundation
Could have been a Senator if it weren’t for that meddling kid
Zinke’s likely replacement is a “swamp creature”
Unlike many in the nation’s capital, acknowledgement seems less important to [David Bernhardt, the second-in-command at the Department of the Interior,] than behind-the-scenes power. And the latter he has. As Zinke ticked off the accomplishments of his first year—fulfilling the president’s vision for “energy dominance,” selling off public lands, and taking on the Endangered Species Act—he might as well have been naming feathers in Bernhardt’s cap. This stout, unobtrusive, middle-aged man in square glasses has been one of the most effective officials in the Trump administration, and after 14 months on the job, he appears to be within striking distance of taking over the department that oversees a fifth of the nation’s landmass.
Smart and generally well-liked by his colleagues, Bernhardt is regarded, with grudging respect from environmentalists, as the “brains behind the agency.” …
Bernhardt is the perfect No. 2 to a highly visible No. 1. Zinke is the folksy charmer; Bernhardt is the strictly-business lawyer. Zinke is the relative outsider, an opportunist, and a politician; Interior watchdogs say Bernhardt is the ultimate DC swamp creature. Zinke is relatively new to Interior; Bernhardt, who spent eight years at the department earlier in his career, knows the ins and outs of its labyrinthine bureaucracy. And while Zinke has been mired in scandals[,] Bernhardt has been largely invisible. Much like Andrew Wheeler, the technocrat who succeeded Scott Pruitt after his rocky stint atop the Environmental Protection Agency, Bernhardt could seamlessly take command[.]
Investigating Zinke — a look back
CREW has determined that Zinke has faced 17 federal investigations into alleged misconduct — though he was cleared of three of his five alleged Hatch Act violations. The Washington Post estimates “at least 15” investigations. The honors are/were being done by the Office of Special Counsel, the Interior Department’s Inspector General, the Government Accountability Office, and soon, according to today’s reports, the Justice Department. (And the Democrat-controlled House Oversight Committee is on deck in January.) Here are a few, via CREW:
The Interior Department blocked a casino project proposed by the Mohegan and Mashantucket Pequot tribes after Zinke met with MGM lobbyists. Documents later revealed that by doing so, Interior had rejected recommendations from federal experts. The Inspector General has opened an investigation. …
Zinke tweeted a picture of himself wearing socks with President Trump’s Make America Great Again campaign slogan using his official Twitter account. OSC had previously instructed White House officials to avoid wearing or displaying the MAGA slogan while on duty. OSC confirmed that it had opened a case file into Zinke’s tweet. …
Following reports that the Interior Department would spend nearly $139,000 to replace three sets of doors, House Oversight Committee Chairman Trey Gowdy (R-SC) requested a briefing from the Interior Department on plans to replace the doors, as well as documentation of the purchase. It is unclear if this inquiry is still ongoing. …
The Inspector General found that Zinke violated Interior Department policies by having his wife travel with him in government vehicles. It also found that Zinke brought campaign contributors on an official boat tour and tried to sidestep department policies in order to have his wife’s trips covered by taxpayer funding.
The end of Zinke at Interior (because ethics) — and now we’ll see if he gets indicted
Ryan Zinke, the secretary of the Interior Department and a key figure in the president’s sweeping plan to reshape the nation’s environmental framework, will leave his post at the end of the year, President Trump said on Saturday. Mr. Zinke’s departure comes amid numerous ethics investigations into his business dealings, travel and policy decisions. …
Mr. Zinke is the latest Trump official to exit an administration beset by questions of ethical conflict. … [A] former Montana congressman and member of the Navy SEALs best known for riding an Irish sport horse through Washington on his first day in office, [Zinke] oversaw mineral extraction and conservation on roughly 500 million acres of public land. He had become the subject of several federal investigations, one of which his department’s top watchdog has referred to the Justice Department, a potential step toward a criminal investigation.
The inquiries include an examination of a real estate deal involving Mr. Zinke’s family and a development group backed by the Halliburton chairman David J. Lesar. Mr. Zinke stood to benefit from the deal, while Mr. Lesar’s oil services company stood to benefit from Mr. Zinke’s decisions on fossil fuel production.
Informative thread about ruling striking down Obamacare
Texas federal judge strikes down Obamacare
U.S. District Judge Reed O’Connor in Fort Worth agreed with a coalition of Republican states led by Texas that he had to eviscerate the Affordable Care Act, the signature health-care overhaul by President Barack Obama, after Congress last year zeroed out a key provision – the tax penalty for not complying with the requirement to buy insurance. The decision is almost certain to be appealed all the way to the Supreme Court.
Texas and an alliance of 19 states argued to the judge that they’ve been harmed by an increase in the number of people on state-supported insurance rolls. They claimed that when Congress repealed the tax penalty last year, it eliminated the U.S. Supreme Court’s rationale for finding the ACA constitutional in 2012.
NYPD says its officers did nothing wrong in video of police tearing a 1-year-old baby from its mother that went viral
Johnson & Johnson stock takes huge dive after report reveals that it knew it had asbestos in its baby powder
Johnson & Johnson’s (JNJ) stock tumbled 10% on Friday — wiping out close to $40 billion of its market value — after a Reuters report said the company knew for decades that asbestos was in its baby powder.
The company has been grappling with lawsuits alleging some of its talcum powder products caused cancer. But the Reuters report cites documents and other evidence that indicate company executives, mine managers, scientists, doctors and lawyers knew about the problem and failed to disclose it to regulators or the public.
Biden advisers float picking Beto as VP
The discussions suggest Biden is aware that his age may be the biggest hurdle to launching another bid for the Democratic presidential nomination, especially in an era when many in the party yearn for a new generation of leadership. He would be the oldest person to ever be elected president.
Past and current advisers to Biden have held frequent conversations about options to alleviate concerns about age, including teaming him with a younger running mate. One option that has been floated, according to a source with knowledge of the talks, is outgoing Texas Rep. Beto O’Rourke, who at 46 has become the subject of intense 2020 speculation after nearly beating GOP Sen. Ted Cruz.
Major investigation finds a Johnson and Johnson cover-up
A Reuters examination of many of those documents, as well as deposition and trial testimony, shows that from at least 1971 to the early 2000s, the company’s raw talc and finished powders sometimes tested positive for small amounts of asbestos, and that company executives, mine managers, scientists, doctors and lawyers fretted over the problem and how to address it while failing to disclose it to regulators or the public.
The documents also depict successful efforts to influence U.S. regulators’ plans to limit asbestos in cosmetic talc products and scientific research on the health effects of talc.
A small portion of the documents have been produced at trial and cited in media reports. Many were shielded from public view by court orders that allowed J&J to turn over thousands of documents it designated as confidential. Much of their contents is reported here for the first time
Mulvaney will give up his other job to babysit Trump
Ladies and gentlemen, your new (acting) White House chief of staff
Michigan GOP to voters: Screw you
A typically strange development in the George Papadopoulos saga
Mueller: Flynn was no FBI victim
Ivanka is in the middle of the brewing scandal over Trump’s inauguration
The inauguration paid the Trump Organization for rooms, meals and event space at the company’s Washington hotel, according to interviews as well as internal emails and receipts reviewed by WNYC and ProPublica.
During the planning, Ivanka Trump, the president-elect’s eldest daughter and a senior executive with the Trump Organization, was involved in negotiating the price the hotel charged the 58th Presidential Inaugural Committee for venue rentals. A top inaugural planner emailed Ivanka and others at the company to “express my concern” that the hotel was overcharging for its event spaces, worrying of what would happen “when this is audited.”