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Citigroup Fails Inspection

During the Fed's annual Comprehensive Capital Analysis and Review process, nicknamed CCAR, banks undergo careful scrutiny to determine how they would fare under the weight of another major financial crisis. The results of these tests determine whether banks will be allowed to raise dividends or initiate share buyback programs, and this year, the only big bank to fail was Citigroup (NYSE: C  ) . This is the second time in three years it has failed.

The problem this year wasn't with Citigroup's liquidity. The bank's capital ratios fell well above the required benchmark. The problem was the bank's processes in place around its ability to forecast losses across all of the markets in which Citigroup operates. These processes domestically and internationally did not reach a level that the Fed decided was adequate.

But with shares as cheap as they are today, does this black eye make Citigroup a bank to stay away from, or is now a good time to buy? On today's Stock of the Day, Motley Fool analyst David Hanson says he's definitely not staying away. Despite Citigroup's troubles, it remains the cheapest of the big banks today, and it still trades at a discount to its tangible book value. David thinks this bank will definitely be in a better place five or 10 years down the road.

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Do you hate your bank? If you're like most Americans, chances are good you answered yes to that question. While that's not great news for consumers, it certainly creates opportunity for savvy investors. That's because there's a brand-new company that's revolutionizing banking, and is poised to kill the hated traditional brick-and-mortar banking model. And amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. To learn about about this company, click here to access our new special free report.

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  • Report this Comment On March 27, 2014, at 4:18 PM, quasimodo007 wrote:

    bet their GoP Greedy Mafia CEO got a huge bonuses and more TAX Free Paid PERKS. and getting huge billions dollars TAX breaks at Taxpayers expense.

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8/28/2015 3:22 PM
C $52.94 Down -0.50 -0.94%
Citigroup Inc CAPS Rating: ***