Citigroup Outlines Fannie/Freddie Exposure (C, FNM, FRE)

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Citigroup Inc. (NYSE: C) has just filed with the SEC information about its perceived total exposure to Fannie Mae and Freddie Mac securities in an effort to fend off any over-exposure concerns.  As of September 8, the bank said its net exposure to the preferred and convertible preferred shares of Fannie Mae and Freddie Mac was approximately $50 million.  Citi said it holds these securities primarily in its "Institutional Clients Group" trading account, which is marked-to-market through revenue.

Quarter-to-date, the pre-tax impact on revenuefrom trading losses and write-downs of its exposure is approximately$450 million, according to Citi. The exposure was approximately $1 billion as of June 30, and the company noted the exposure has been reduced substantially through sales, hedges and write-downs.  Citi alsohas an insignificant amount of net exposure to the common shares ofFannie Mae and Freddie Mac.

As a caveat and for safe harbor and "CYA" verbiage, Citi noted that thethe final impact on Citi’s quarterly financial results could differfrom the quarter-to-date impact disclosed above.

Jon C. Ogg
September 10, 2008