Citigroup Has $27.9B in Subprime CDO Exposure

Citigroup, which has suffered billions in losses from it's A- to D securitization business, still has $27.9 billion in subprime CDO exposure on its books, though almost $10 billion of that is hedged. According to the company's third quarter earnings statement, the bulk of its exposure is in what it calls "older vintage, high grade" asset-backed security CDO (collateralized debt obligations). A CDO is a security made up of other securities, in Citigroup's case, subprime MBS or ABS. But Citigroup - which recently slashed its wholesale mortgage network by 90% - also has other residential-related problems. In the third quarter it took a $1.2 billion writedown on alt-A mortgages (net of hedges) and suffered a $192 million loss on a hedge tied to its mortgage servicing portfolio. CitiMortgage, at June 30, ranked fourth among all residential servicers with an $816 billion portfolio, according to the Quarterly Data Report. In the third quarter Citigroup lost $2.8 billion overall. It entered the subprime business earlier in the decade when it bought Associates First Capital Corp. of Texas.