[NVDave]

Do you think there’s anyone smart enough there to think of this?

And could they do this without an SEC requirement of disclosure?

[JasonC]

Doubtful. They have been maximizing their liquidity. They knew enough to force epic cash flows in their direction, but assumed market participants would see what that means. They haven't. Instead said participants are all focused entirely on solvency measured in historical book value terms, apparently unaware that earning more on the asset than is paid on the liability is the source of banking profit and stability. Instead said outside participants are all thinking, "30 to 1 leverage, 4% price decline, bankrupt".

The solution is to show a profit, proving that liquidity can be cashed in for earnings at will. In this market, that is easy. Citi can borrow at 1-3% rates from the Fed or one CDs from savers, and buy in its own debt in the secondary market at 10%. Anyone can doubt whether every other bond in existence will really pay the 10-15% rates currently on offer, I suppose, but Citi isn't going to default to itself. They've got something like $400 billion in treasuries that have flown to the moon, yielding next to nothing. Damn the risk measures and earn, if that is what people want.