An expose of bad businesses and their unethical practices

Citigroup reported today that it lost nearly $10 billion dollars in the final quarter of 2007. The vast majority of these losses came from write-downs taken due to losses on the heavy investments that it had made in the mortgage industry.  Citigroup had to take a portfolio loss of over $18 billion. It also increased its loss reserves by over $4 billion, signaling that the mortgage industry losses might still get worse.

These losses will result in the loss of 20,000 jobs within Citigroup, with more on the way. Thus, both Citigroup investors and Citigroup employees will pay the price for the company’s losses in the mortgage crisis. The losses  were biggest in Citigroup’s bad investments on mortgage-backed bond instruments called collateralized debt obligations. It also was forced to bring $49 billion in hemorrhaging funds known as structured investment vehicles onto its books.

Many of these represent losses in the continuing mortgage and foreclosure crisis. This crisis was cause by a combination of behavior verging on the fraudulent by mortgage lenders, and to a lesser degree by borrowers, plus a lack of effective oversight by the Federal government. The general downturn in the economy, partially caused by this crisis, means that even more borrowers will be unable to make their mortgage payments, causing yet more foreclosures.

It seems as if the Bad Business in the mortgage industry will never end.