How big will Citigroup's 4Q writedown be?

Casting aside the hubris of ego. It is still a tiring exercise to watch as others get credit [because of well-oiled PR machines] for stories I broke months earlier. For example, CIBC banking analyst, Meredith Whitney, is currently the toast of Wall Street, for predicting the demise of the sub-prime market.

Loyal readers of the 10Q Detective blog, however, know that David J Phillips, in December 2005, first cautioned investors on the adverse affect to financial performance of sub-prime loan originations:

“HRB is counting on its mortgage origination unit to be a continuing strong driver of top-line growth. For the second half of fiscal year 2006, management believes that the Company can achieve funding volumes consistent with first-quarter levels of $10 billion to $11 billion per quarter resulting in full year origination growth of approximately 40 percent. HRB's mortgage-centric reliance on the subprime mortgage market will be its EPS albatross: tighter credit requirements and higher borrowing rates will lead to smaller interest rate spreads on loan originations, lower average gains on whole loan sales, and reduced net margins on its loan portfolio.”

Best-
David J. Phillips, Publisher
www.10qdetective.blogspot.com

A KIPLINGER’S PERSONAL FINANCE & BUSINESSWEEK "MUST-READ" BLOG! A ‘SMART STOP’ Must by The Journal of Accountancy (March 2008)