The real carnage may be still to come

This is proving to be a 'kitchen sink quarter' in which banks attempt to get all their write-offs and losses out of the way at once. Whatever they may want us to believe, we're not out of the woods yet.

Imagine that you recently borrowed your friend's car and now you can't seem to find it. It wasn't stolen, it wasn't towed, you've simply misplaced it. You're in trouble, and your friend is definitely going to be angry. Isn't now the best time to also tell him any other bad news that he may have coming to him? He's already mad, how much worse could it get? Apparently this rationale is also applied by some of the country's largest companies.

In September at the Lehman Brothers' Financial Services Conference, Citigroup's (C) CEO of North American consumer operations, Steven Freiberg, boasted, "Where you think there would be a fire in our subprime portfolio it actually looks pretty good." He even provided a chart showing Citigroup's industry-beating mortgage delinquency stats.

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