Here's Why Citi Is So Happy About Its $38 Billion Bailout

Rolfe Winkler has a nice update on Citi’s $32 billion in deferred tax assets which the IRS just ruled the bank could keep.

dta

As you can see, it’s a pretty major chunk of what comprises Citi’s tangible common equity, but Winkler makes a good argument for why DTAs shouldn’t be counted as capital.

The problem with including deferred tax assets in capital is that DTAs are only useful when you make money, but the point of capital is to be there when you don’t.

Imagine declaring bankruptcy and asking the judge to let you pay off your credit card bills with tax loss carryforwards.

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