At The Motley Fool, we poke plenty of fun at Wall Street analysts and their endless cycle of upgrades, downgrades, and "initiating coverage at neutral." So you might think we'd be the last people to give virtual ink to such "news." And we would be -- if that were all we were doing.

But in "This Just In," we don't simply tell you what the analysts said. We'll also show you whether they know what they're talking about. To help, we've enlisted Motley Fool CAPS, our tool for rating stocks and analysts alike. With CAPS, we'll be tracking the long-term performance of Wall Street's best and brightest -- and its worst and sorriest, too.

And speaking of the best ...
You know you're in a bear market when the bankers start eating their own. Amid Tuesday's market mayhem, one rating stood out from the crowd: Citigroup's decision to downgrade shares of American Express (NYSE: AXP) to "hold." This decision didn't stand out for its insight, but for its lack thereof -- for it's sheer me-too, Johnny-come-lately to-understanding-ness. According to Citi, "trends in card credit quality are getting worse," "late and unpaid charges are increasing," and "a recession would limit credit card use and increase the cost of credit."

Duh, duh, and ... huh?
Let's address the first two statements first, and I'll get to my "huh?" reaction in a moment. Citi's first two assertions are readily verified by American Express itself. In an 8-K statement filed with the SEC, AmEx said it's "seeing signs of a weaker U.S. economy as Cardmember spending began to slow and delinquencies and loan write-offs trended upward during December."  Specifically, delinquencies rose 30 basis points between Q3 and Q4, hitting 3.2%. Writeoffs are up about 60 basis points sequentially, at 4.3%.

In response, AmEx is taking a $275 million after-tax charge to Q4 earnings. The company warns that it will fall about 20% short of (pre-warning) consensus analyst earnings targets for the quarter. But AmEx made this disclosure nearly two weeks ago. (Did Citi just get around to reading it this morning?) Seems whatever else you call Citi, it's hardly prescient, basing its downgrade on two-week-old news.

Or is it?
Then again, there's always the possibility that the situation could become even worse than AmEx has depicted it. Sure, investors would have been better served had Citi warned us about AmEx two weeks and 11% ago. But is this a case of "better late than never"?

After all, Citi scores a strong 86.09 CAPS rating, putting the analyst just a research report's width way from the top 10% of investors. Within the financial arena, it's made several correct calls:

Company

Citigroup Said:

CAPS Says (Out of 5):

Citigroup's Pick Beating S&P by:

E*Trade (Nasdaq: ETFC)

Underperform

***

36 points

Washington Mutual (NYSE: WM)

Underperform

**

5 points

Western Union (NYSE: WU)

Outperform

*****

8 points

On the other hand, Citi has suffered spectacular flameouts on several more financials:

Company

Citigroup Said:

CAPS Says:

Citigroup's Pick Lagging S&P by:

Fannie Mae (NYSE: FNM)

Outperform

*

36 points

Sovereign Bancorp (NYSE: SOV)

Outperform

*

32 points

Zions Bancorp (Nasdaq: ZION)

Outperform

**

36 points

Things that make you go ... huh?
From the above stats, I'd have to say that Citi looks far from infallible in the banking arena. Moreover, the analyst's blithe assertion that "a recession would limit credit card use" sounds a little counterintuitive to me. Sure, I agree that when the economy goes south, it'll put a damper on consumer spending. But if I might quote hedge fund guru John Mauldin, with whom we discussed the looming recession last week: "It's important to remember that, barring a major policy misstep, recession will not become a permanent feature of the economy. While we cannot fix the housing and credit bubbles in a quarter, we will get them fixed. I don't think the recession will last more than a year."

Mauldin recognizes that recession is a temporary phenomenon, and I suspect that most consumers -- AmEx cardholders among them -- do, too. Seems to me that a consumer's rational response to a weakening economy could just as likely be to use a credit card as a crutch -- to charge bills "to the card" today, and pay them off when things start looking up for the economy. This suggests to me that while "discretionary plastic use" might decline in the near future, AmEx could see more customers use its cards to finance essential purchases.

Foolish takeaway
With that prospect in mind, analysts' prediction of 11% long-term profit growth at AmEx looks reasonable to me. And at less than 13 times trailing earnings, the stock's price is looking pretty reasonable, too.

Washington Mutual is a recommendation of Income Investor, while Western Union is an Inside Value pick.

Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 478 out of more than 82,000 players. The Fool has a disclosure policy.