Citigroup

Citi announced $18 B in writedowns, $10 B in losses, and $12.5 B in dilution of shareholders, euphemistically called "capital infusion."

But the biggest number is revenue. The reason the loss was double expectations was not the size of the writedown. It was a corresponding loss of revenue from Ponzi scheme operations. Even when the writedowns cease, revenue will remain impaired for years.

Let's try to estimate how much Citi's value is impaired by loss of revenue alone. EPS for 4Q06 was $1.03. 30% of that is $0.31. That comes out to yearly EPS of $1.24. At a market multiple PE of 15, we get a fair value price of $18.60/share.

Citi has a long way to fall. Add in 8.5% equity dilution. Subtract $875 M in yearly interest for the capital infusion. On top of that, Citi's Tier 1 capital ratio has fallen to 7.1%. That leads me to believe that their new CEO, Vikram Pandit, wanted to take more writedowns but couldn't. We've got more on the way. Take my word on it.