Financial entities now seem hard at work inflating earnings via some largely undisclosed version of (problem?) securities sales, and ratcheting  up "fees" to customers. Of course my suspicion is that these transactions are conducted with Enron style off-balance sheet entities, or quasi-related hedge fund operators. But, we aren't going to get even close to that aspect from public information. No sir, not even to first base. Here are some excerpts from the Citigroup conference call.   If you actually listen to the call, the tone of the questions are NOT hostile, but polite.  Given the failure of management to deal with these analysts in a forthright manner, I am amazed at their patience. Think we know the answer why? It's all one big club.

I for one, would like an answer, is that really too much to ask? . Instead management just evades and skirts the answer, via the now epidemic use of the Ministry of Truth technique of a response rather than answer, perfected in a tiring, repetitive manner in our culture by propagandists like Donald Rumsfeld.  For illustration, and in the comfort of your own sanatorium, listen especially to soundbite 5 in the "Rumsfeld soundbite competition".

First, the analyst asks for the amount of the security gain. Finally, after slithering through the grass like a snake by responding about something else, namely "hedging performance" (another can of worms?), the exec gives a half ass response, as opposed to an answer:, coining the vague term "single biggest part" of the $296 million gain is from sale of securities. Hearing this, I wonder why she just doesn't give the number? The analyst asks if the "number" is in "one of the pages". The response is "no", and then Krawchek ignores the followup question, "where can I get it." We then get a direct question about consumer fees, and once again we merely get another response, as opposed to an actual answer.

Webster's definitions:

answer: a correct response to a question      response:  a reply, a rejoiner

Andrew Collins - Piper Jaffray

Real estate lending in the US consumer, there's about $1 billion in revenue there. It was up 20% year over year, 26% linked quarter. I don't know what's going on there, but I'd love any clarity.

Sallie Krawcheck

We had, I think, better hedge performance in the business, as well as we did have some sales of some securities, in the quarter as well.

THEN FROM:
John McDonald - Banc of America Securities

In the US consumer lending segment, you mentioned security gain helping on the sequential revenue growth in non-interest income. Could you tell us how much of the security gains were in there, and what drove that realization of those this quarter?

Sallie Krawcheck

Yes. I think, if you look at it on a sequential basis, I'm just turning to the page. I know we have also got some good head hedge performance, as well. Last quarter on page 14 of the supplement, we had a negative $11.7 million in the net servicing and gain/loss. So we had some hedging effectiveness in that quarter, and then we had a combination of that being more effective, as well as the sale of some securities, as well as better gains on sales of some of the home mortgages that we hold, which really drove that turnaround.

But I wouldn't say, if you eyeball it, the net servicing and gain/loss on sale is a better number this quarter versus the past couple of years. It's not a number that's extraordinarily out of the ordinary.

John McDonald - Banc of America Securities

So the $296 million?

Sallie Krawcheck

I was referring to the net servicing gains and losses that we have, which are on the second page, which is a good chunk of that, again.

John McDonald - Banc of America Securities

The $296 million seems outsized relative to the last couple of quarters, $93 million last quarter and $50 million. I was just wondering if there was some way to quantify how much gains contributed to that, so we can have a sense of the go-forward?

Sallie Krawcheck

The biggest single part of it is going to be the sales of the securities.

John McDonald - Banc of America Securities

Is that on one of the pages?

Sallie Krawcheck

No, it's not.

John McDonald - Banc of America Securities

We can follow up, maybe, and get that?

Sallie Krawcheck

Art stands ready to speak.

My comment: Art, doesn't answer, or indeed even bother to respond, and they immediately move on to next question.

THEN, QUESTION ON CONSUMER FEES:

Mike Mayo - Prudential Equity Group

The fees in US consumer were up $279 million, linked quarter. Otherwise, the spread revenues were down. So it seems like all of the growth has come from fees there. I guess fee revenues in cards were up 11%, linked, even with sales volume down. US consumer lending fees were up threefold. So my question is, are those some of the sales of loans or gains on sale?

Sallie Krawcheck

I think we already talked about consumer lending, right? We talked about some of the hedge performance. I also talked about in US card, the excess servicing, which is driven by very good management of that portfolio by the businesspeople. So I think you've gotten some chunks on what's going on there. But all in all, I think we're pretty happy with how that's evolving.

My comment: Glad you're "happy" with it, Sallie, but no I haven't gotten a good chunk about what's going on, not even close, and to be honest (what a novel concept)  have more unanswered "questions" than ever? On that note enjoy this video presentation.