How Did Citigroup Inc Get It So Wrong?

Citigroup projected that it would pass the Fed's CCAR stress test, but the Fed disagreed. How could Citigroup have been so wrong?

Mar 27, 2014 at 4:10PM

The Federal Reserve released its annual Comprehensive Capital Analysis and Review, or CCAR, stress test results, which show which banks will be allowed to increase their dividends or initiate share buyback programs, and which won't. Among the big banks, the only one to fail the test this time around was Citigroup (NYSE:C), it's second time failing in three years. Citigroup had conducted its own internal analysis and was confident it would be found in compliance with the Fed's wishes, so what went wrong?

In this segment of Thursday's Where the Money Is, Motley Fool banking analysts Matt Koppenheffer and David Hanson take a look at Citigroup, its relatively new CEO Michael Corbat, and how there could be such a discrepancy between Citigroup's analysis and the Fed's.

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David Hanson has no position in any stocks mentioned. Matt Koppenheffer owns shares of Citigroup. The Motley Fool owns shares of Citigroup. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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