What is CitiGroup Smoking?

CitiGroup wrote to customers last week:

By nearly all measures, Citi is one the best capitalized financial institutions in the world. Citi has robust and stable operating income, access to funding, strong levels of liquidity and the best talent in the business.

After multiple government capital injections amounting to $45 billion and the latest government promise to backstop hundreds of billions in additional losses, some of this may now even be true.

But I have inquired as to how they substantiate the claim to have “the best talent in the business” and look forward to sharing the response.  One shudders to imagine how costly this could have been for taxpayers had they not had the best talent in the business.

In other company-specific bailouts (AIG, implicitly with Bear Stearns and WaMu), management got the boot as part of the deal.  Why didn’t this happen with Citi?  Because they really are the best in the business?  Because the company is in such precarious shape that further disruption would be too risky?  Because everyone knows the problem isn’t present management’s fault?  Inquiring minds want to know.

The full text is below.  The lesson for aspiring public relations professionals is apparently anything is permissible in the name of preventing a bank run.  I love the way the small matter of a special bailout just for CitiGroup requiring multiple Federal agencies merits an oh-by-the-way in paragraph five:

Recently, we talked with our employees about why Citi is stronger today than it was just one year ago. Given the current state of the global markets and concerns being raised about the financial industry and Citi, we thought it was important to communicate with clients directly about what, if anything, this means for them.

By nearly all measures, Citi is one of the best capitalized financial institutions in the world. Citi has robust and stable operating income, access to funding, strong levels of liquidity and the best talent in the business. Over the last year, we have significantly reduced expenses, while continuing to focus on client service and support. We’ve also made key decisions around our capital allocation, and as a result, our balance sheet is smaller and healthier. We’ve also reduced risky assets and have strengthened our risk management processes globally.

Our businesses are sound and very well positioned in key markets throughout the world. This is a diverse and dynamic organization with talented employees dedicated to serving our clients in ways that other banks simply cannot. And, in addition to being a financial services leader in the U.S., Citi’s international client franchise has no equal.

Many clients like you have asked why the market has not responded more favorably to this news. As frustrating as this may be for us and the many Citi employees who work hard for our clients each day, we also realize that it may raise concerns for you. While we are confident in the strength of our firm, today we took an additional step to fortify our capital base, reduce our future risk exposure, and reassure the market about Citi’s financial strength and ability to absorb credit losses.

Today we announced a program with the U.S. Treasury, the Federal Reserve and the FDIC that will strengthen Citi’s capital ratios, reduce our future risk exposures, and increase liquidity. While the global economic storm is still not over, this transaction brings even greater clarity to our overall financial strength and ability to deliver on the promise of this great institution. Through this, we will continue to do what we can each day to be a leader in helping to stabilize the global financial community.

As we work through this period, we want to express our thanks to you for choosing Citi. Our clients are our franchise and you are the most important asset we have. This has been a challenging year, one that we will not soon forget, but we are confident that we will persevere and come out stronger in the end. While the environment will continue to present challenges, this company stands ready to serve you. We are honored to do so and look forward to many prosperous years ahead.