From mid-1998 to later that year, Citigroup (C) fell from $32 to just above $13. The stock moved from almost $4.50 in February of 1987 to $1.40 in October 1990. The markets hit periods of financial turmoil during both of those times. Looking back to the Latin American loan crisis in the 1970s, Citi almost went under.

In other words, even shares in a financial institution the size of Citi can loss two-thirds or perhaps three-quarers of their value. The shares have fallen from $57 less that a year ago to about $30 now.

David Hendler of CreditSights recently wrote that he still has grave concerns about Citi’s $46 billion in CDO exposure. Hendler says it could take five years for Citi to recover from its current wounded condition and investors may not want to wait. But, if the bank is not bought or merged, the only way for shareholders to exercise their loss of patience is to sell.

The economy has not dodged a recession, at least not yet. That means that consumer credit could follow mortgages into a crater. Citi has enough business in it consumer banking operation for that to be more than troublesome.

The UBS (UBS) subprime loan hit of $10 billion last week is a sign that other huge banks like Citi may have larger than expected write-downs at the end of the fourth quarter. Then Citigroup will have to face cautious auditors. Citi has spreadsheets and figures on why it has valued illiquid assets the way it has. But, under a review, those pools of capital may be viewed differently.

The idea that Citi would have to restate earnings for part of the second half of 2007 is not out for the question. Not at all.

The market may be learning a lesson now, espcially about money center banks. Wachovia (WB) and Bank of American (BAC) both recently disclosed that the fourth quarter will be worse than Wall St. expected. Citi is not immune.

Could Citi go to $15? Certainly. At that point, it may be acquired, or, as has happened before in the company’s history, the shares may simply recover.

Douglas A. McIntyre

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