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Banking, finance, and taxes

Citigroup (C) Downgrades Everyone But Itself (LEH)(MS)(GS)

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By Douglas A. McIntyre Updated Published
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Citi_logoThe 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

Photo of Douglas A. McIntyre
About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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