The rule on Wall St. is that securities analysts don’t rate their own firms. Now that brokerage research departments are no longer slaves to investment banking, the independence of analysts is supposed to be a given. They still do not put "sell" ratings on many stocks, even in a bear market. Perhaps they lack the courage of their convictions because a bad grade may deny them access to the companies they cover.

Citigroup downgraded Lehman (LEH), Morgan Stanley (MS), and Goldman Sachs (GS) saying future write-downs and slow investment banking would hit earnings.

What Citi did not do was critique itself. Since it is financially weaker than most of the financial firms it covers, if it does not like their prospects, it must loath its own.

Citi said its new price target for Lehman is $35, down from $50. It still rates the investment bank as a "buy" which is incomprehensible. Lehman’s stock trades under $14 and a lot of smart money believes that its share value will hit zero.

Citi predicts that the three brokerages will have write-downs of about $2 billion each in the next quarter. Based on the order of magnitude, that would put Citi charges at $3 billion or more.

Citi cannot rate itself, but, if it could, it would have to put its own shares down as a "sell".

Douglas A. McIntyre

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