Not that it will help them.

In fact, I fully expect it to flatten their share price - although the market is a funny thing, and it may react exactly the other way.

This evening they announced that they are taking their SIVs back onto their balance sheet, in response to a threatened downgrade by Moody's.

This will do two things almost immediately:

• Hit Citibank's capital ratios. Hard. We're talking about some $50 billion worth of SIVs here in seven separate funds. This is not chump change! In all probability this means a dividend cut - perhaps a substantial one (like in half) and/or major dilution through more stock issuance.
• Destroy any possibility of the "Super-SIV", or M-LEC, from seeing the light of day.

Now why do I say that Citibank has done the "right thing", even though if there is any rationality in the market whatsoever it should result in an immediate $5 or so hit to their share price?

Because the essence of the problem in the credit markets is trust and opacity. By pulling these vehicles back onto the balance sheet Citibank is taking a step towards MORE transparency and restoring trust!

Therefore, no matter how good or bad it is for Citibank, it is the right step for America.

It is also likely to raise pressure in a serious fashion on every other investment bank on Wall Street to do likewise, because with this move Citibank may be the only Investment Bank on Wall Street which a lender can now figure out how to price loans to!

That of course is a tremendous competitive advantage.

One of the concerns I have repeatedly voiced is that we could be headed not for a recession (which I believe is inevitable, and in fact, we are likely already in one) but something far worse, perhaps as bad as a replay of the 1930s. I based this potential on the very real possibility that all of these banks would hold their SIVs out at "arms length" until they blew up, and then would end up eating the backstops - perhaps by force. With nobody able to fairly value the risk that a borrower brings to the table, lending dries up.

The result is a deflationary credit collapse - the more accurate term for what happened in the 1930s.

What most call it "A Depression".

My expectations in this regard were supported by statements such as Citi's in its latest SEC filings, in which it said plainly (and without ambiguity) that it would not take any action that would result in them "recovering" them onto their balance sheet.

What a difference a new CEO makes.

Congratulations Citibank and CEO Vikram Pandit. Even though this should murder your share price, at least in the short and intermediate (months) term, it is the right thing to do.

To the rest of your clowns on Wall Street - how about following suit?