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Housing market making a comeback? Not so fast says Citigroup

By Christina Rexrode
Associated Press

NEW YORK — Citigroup isn’t as enthusiastic as its peers about a comeback in the housing market.

On Friday, executives at Wells Fargo and JPMorgan Chase declared that the long-struggling market had turned a corner. On Monday, Citigroup’s top number-cruncher said he wasn’t so sure.

In a conference call with reporters after the bank released its quarterly earnings, chief financial officer John Gerspach cautioned that recent history is littered with upturns in the housing market that proved short-lived.

He said that despite a few signs of stabilization in the housing market, there are “still some rather significant challenges to be faced.” He warned against predictions with the uncertain presidential election and federal budget still casting a shadow.


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    “I don’t use phrases like ‘turn the corner,'” Gerspach said, referring to statements Friday from JPMorgan CEO Jamie Dimon and Wells Fargo finance chief Tim Sloan. “I have difficulty seeing corners sometimes, so I’m not sure what corner we may have turned.

    “There’s still a question in my mind about whether we’ve got a strong enough economy to continue sustaining the housing market,” he added.

    Mortgages, and the securities they were bundled into, were a scourge during the financial crisis, felling storied financial institutions that made loans that were too risky or bet that securities made of subprime mortgages would keep rising.

    Citigroup still is trying to patch its reputation after the financial crisis nearly brought it to collapse. After years of empire-building, the bank has been selling units and trying to become more efficient and more manageable.

    CEO Vikram Pandit still is an ardent defender of the big-bank model, even though the former CEO, Sandy Weill, went on CNBC in July and said big banks should be broken up. It was a surprising change of heart for the dealmaker who built Citi into a behemoth.

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