After announcing a decline in net income of roughly 60% from the 3Q06, Citigroup blamed the drop in earnings on the weak performance in its fixed income credit market activities, write-downs in leveraged loan commitments, and increases in consumer credit costs. The firm announced losses on approximately $1.3 billion pre-tax of subprime MBS that were being warehoused for future CDOs, CDO positions, as well as leveraged loans warehoused for future CLOs. The bank also announced losses of approximately $600 million pre-tax in fixed income credit trading as a result of significant market volatility and the pricing dislocation.

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