Citigroup (C) & Robert Roubin / Obama

So what is interesting here is this:

1) Roubin was an advisor/banker at Citigroup and Board Member. He is an an economic advisor to Barack Obama and possible Treasury Secretary. He had that role with Bill Clinton. Should a guy that clearly was asleep at the wheel re: risk management and enriched himself the entire time get such a role? I don't think so.....

2) Citigroup is really the reason that the banks got $25 billion each (Citigroup, Wells, JPM, Bank of America) in loans from Paulson via their "closed door" meeting that was highlighted in a 60 minutes video link I posted about a month ago. Ken Lewis of Bank of America is interviewed.

Citigroup is 60%-70% international. If they go under the "counter party" risks (ie. exposure of other worldwide banks/nations) would go THROUGH the roof and take down the entire global financial system.

If you look at their losses they have some of the highest amongst all banks in writedowns associated with mortgages - I am sure they will eventually be passed by Wachovia.

Additionally, look at their exposure to consumer credit. Henry Blodget estimated it at $500 billion in exposure. A 10% writeoff is $50 billion!

Just something to keep an eye on.



Dan Ross
http://www.BetterBizBooks.com

Subprime Auto Loans & Tools of the Trade

http://news.yahoo.com/s/usatoday/20080331/tc_usatoday/hightechgeardisablescarifborrowermissespayment

Apparently 7 million autos purchased by subprime auto buyers. Estimated default rate is 30% for subprime auto borrowers vs. 7% for prime auto borrowers.

So many subprime borrowers are installing these lojack devices onto the car. No payment, no car movement or annoying noise, etc.

Companies selling such devices include:
Sekurus
Pay Technologies
PassTimeUSA

So as credit disappears, and investors won't buy the auto securities sold (yup, those loans are collateralized and sold too folks) the auto industry will further contract to "true demand" as I call it.

I think this (auto sales) are going to be a nightmare/HUGE mess this year

Dan Ross
http://BetterBizBooks.com