Citigroup's quarterly results, announced this morning, are a huge pile of bullshit. That the New York Times would headline their story "After Year of Heavy Losses, Citigroup Finds a Profit" is fairly dubious-although "finds" is hilarious. That's because Citi actually went out and found a way to make it look like they had a profit. We found a great explanation of what Citi did, in a toss-off by John Carney during the earnings conference call.
Probably the thing that will get the most talk after this call is that Citi took a $2.5 billion gain on the decline in the market value of its debt. This is an unrealized gain, meaning Citi didn't actually purchase its debt. But because it could, it gets to record an accounting gain. Without this, Citi would have lost $900 million this quarter.
Likewise, here's the incredibly nasty Bloomberg News article opener:
Citigroup Inc., the U.S. bank propped up by $45 billion in government bailout funds, ended a five-quarter losing streak by posting a $1.6 billion profit on gains from an accounting rule that helps companies in distress.