Tuesday, October 16, 2007
As criticism of Citigroup CEO Charles Prince mounted, the company admitted the obvious -- that its risk management models failed during the summer's credit crisis. The company suffered a 57% drop in third quarter profit and wrote off $3.55 billion because of deteriorating security prices, leveraged loans and bad trading debt. It also set aside an additional $2.24 billion reserve to cover future losses. NYTimes, Citigroup Acknowledges Poor Risk Management; WSJ, Citigroup Model Is Left Shaken By Credit Crunch.