Richard Fuld

Don't Panic Over Citi's Stress-Test Dud

By failing to receive blessing from the Federal Reserve to return cash to shareholders, Citigroup (NYSE:C) and its management team separated themselves in a negative fashion from most of their peers.

While the financial conglomerate suffered a post-stress test hangover on Wednesday, few believe the disappointing results alone will scuttle the banking giant’s lengthy comeback trail.“They’ve come a long way from where they were in 2008. I don’t see this as necessarily a smack down of them. It’s a mixed bag of news,” said David Yermack, a finance professor at the NYU School of Business.Late Tuesday the Fed said Citi’s capital action plan would leave it just below the crucial 5% level of Tier 1 common capital ratio, leaving the bank among just four of 19 that didn’t receive central-bank approval. While Citi squabbles with those who say it “failed” the Fed-mandated stress tests, the disclosure can hardly be spun as good news.That’s especially true because JPMorgan Chase (NYSE:JPM), Wells Far...

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