Banking on a Citigroup Settlement,

Big Citi blues…

Image courtesy of digitalart/FreeDigitalPhotos.net

Image courtesy of digitalart/FreeDigitalPhotos.net

The latest un-shocking revelation coming from the banking industry is that Citigroup is about to cough up $7 billion to settle charges that it sold bad mortgages. The only truly shocking aspect of the story is that the nation’s third largest bank (in assets) thought it was going to get away with lowballing the Department of Justice with a $4 billion offer to settle. The DOJ was initially seeking $10 billion. At least Citigroup now gets to shake off thoughts of a lawsuit. Besides, Citi got off relatively easy compared to JP Morgan who had to dig deep into its pockets for $13 billion – the largest settlement in US history – so far.  Proceeds from the settlement will be divided between consumer relief and government fines. Stay tuned since Bank of America is rumored to be the next bank to ride the multi-billion dollar settlement express train.

Contain yourself…

Image courtesy of supakitmod/FreeDigitalPhotos.net

Image courtesy of supakitmod/FreeDigitalPhotos.net

The Container Store (TCS) posted earnings that all but bummed Wall Street. CEO Kip Tindell attributed the disappointing earnings to a “retail funk.” There is nothing fun (or funky) about that – for The Container Store anyway, since it apparently means that consumers have been opting to spend their hard-earned money on pricier items like cars and homes instead of plastic storage solutions. The nerve. While net sales increased way over 8% from a year ago to $173.4 million, analysts wanted to see $174.21 million. The company posted a loss of $.07 a share instead of an expected $.06 loss per share. Those seemingly innocuous pennies unfortunately, caused a big drop in shares today. The Container Store currently has 60 stores and wants to open a total of 300. And while the idea is, shall we say industrious, the fact is the company reduced its fiscal guidance which tends to be a big red flag to investors.

Heir apparel… 

Image courtesy of iosphere/FreeDigitalPhotos.net

Image courtesy of iosphere/FreeDigitalPhotos.net

American Apparel is apparently getting a $25 million fiscal infusion from Standard General to help boost its finances and pay off a $10 million loan to investment firm, Lion Capital. It’s just the latest episode in the retail chain’s seemingly never-ending drama. Lion Capital argued that American Apparel defaulted on the credit agreement when it made some management changes, namely ousting CEO Dov Charney. The CEO, who was ousted for “alleged misconduct” signed a five year loan agreement with Standard General which does increase his stake to 43%, but forbids him from voting, that is, unless Standard General says he can. However, considering Charney already violated the terms of his ouster when he brazenly walked into a Lower East Side American Apparel store, exercising his voting rights will are the least of his issues.

 

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