Reply #7: Citigroup Loss Raises Anxiety Over Economy: "staggering fourth-quarter loss of $9.83 billion"

[DeepModem Mom]

Source: New York Times

By JENNY ANDERSON and ERIC DASH
Published: January 16, 2008

Citigroup, the nation’s largest bank, reported a staggering fourth-quarter loss of $9.83 billion on Tuesday and issued a sobering forecast that the housing market and the broader economy still have not bottomed out. To shore up their financial condition, Citigroup and Merrill Lynch & Company, which has also been rocked by the subprime mortgage debacle, both were forced again to go hat-in-hand for cash infusions from investors in the United States, Asia and the Middle East, for a combined total of nearly $21.1 billion.

Citigroup’s gloomy news will most likely ratchet up the anxiety of consumers and workers already unnerved over ominous signs that the housing crisis could plunge the economy into a recession. In another troublesome sign, the government reported that retail sales in December declined for the first time since 2002.

Growing pessimism led to another sharp sell-off in stocks, which fell about 2 percent for the day and are now down about 6 percent since the beginning of 2008, the third worst start for a year since 1926.

More bad news is coming, with Merrill Lynch expected to report sizable losses later this week and major financial institutions like Bank of America retrenching segments of their business. These moves add to concerns that financial institutions will be forced to pull back on lending at a time the economy most needs access credit to help cushion against a downturn....

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Concern is growing in the markets that a perfect storm has formed. The fear is that financial institutions will continue to take large write downs as bad loans mount, while consumers, facing higher energy costs, falling house prices and a bleak outlook for job growth, will reign in spending more....

Read more: http://www.nytimes.com/2008/01/16/business/16bank.html?hp