Dec. 4 (Bloomberg) -- Now that Citigroup Inc. has secured yet another taxpayer bailout, where are the writedowns?

You don't have to be that smart to figure out there's still a lot of rot on Citigroup's $2.1 trillion balance sheet. If there wasn't, the New York-based lender wouldn't have needed last week's government rescue, which included a new $20 billion investment by the Treasury Department, plus a guarantee covering about $306 billion of the bank's assets against most losses.

And yet, something's missing: a proper confession.

Let's say a company's board or management concludes mid- quarter that big charges to earnings are needed to write down impaired assets. Under the Securities and Exchange Commission's rules, that must be disclosed within four business days in an SEC filing. If the size can't be determined, disclosure is still required; the company just has to say it's unable to make a good-faith estimate of the amount.

It's been more than a week since Citigroup reached its Nov. 23 welfare deal with the government. Since then, it has made no such disclosure filing, though it did issue a press release on Nov. 19 divulging $1.1 billion of new investment losses.

That leaves a couple of possible explanations. Somehow, the people running Citigroup have imagined a way to avoid concluding that massive writedowns are needed, even after determining the bank might not survive without another bailout. Or -- and here's the odds-on favorite -- Citigroup's bosses operate as if the rules don't apply to them.

Losses in Sight

One reason we know Citigroup is anticipating huge losses is that the terms of its latest bailout agreement envision them. Citigroup is responsible for the first $29 billion of losses in the government-guaranteed portfolio, which includes loans and securities backed by residential and commercial real estate. The government will assume 90 percent of any other losses, with Citigroup taking the rest.

In return, Citigroup is handing the feds $7 billion of preferred stock. How sweet is that? Imagine an insurance company offering to charge you a $7,000 premium with a $29,000 deductible to insure your $306,000 house, knowing full well that the master bedroom is on fire.

That's more than a helping hand. It's a gift. The spillover benefit for the world at large is that a global financial meltdown is averted again, for now, and Saudi billionaire Prince Alwaleed bin Talal's 4 percent stake in Citigroup is saved.

Citigroup's deal might be less offensive if the bank and its protectors were being transparent about what they're up to.

Mystery Number

Start with the basics. The Nov. 23 term sheet released by Treasury said as much as $306 billion in assets will be guaranteed. What did that dollar figure mean? There's no way to tell. The term sheet, which also was approved by the Federal Reserve and the Federal Deposit Insurance Corp., said it will be based on a valuation agreed upon by the parties later.

We don't know if that valuation will be what the holdings were worth last week, at the end of last quarter, or on some other date. We also know little about what the assets are. In addition to the stuff backed by real estate, the term sheet said they include ``other such assets as the U.S. government has agreed to guarantee.'' That could be anything.

Whatever Citigroup's writedowns will be this quarter, there are many obvious candidates. For instance, as of Sept. 30, Citigroup had $63.1 billion of intangible assets, including $39.7 billion of so-called goodwill, which is worth nothing to a company on the verge of collapse. By comparison, Citigroup's stock-market value yesterday was $42.6 billion.

Citigroup also had deemed $7.9 billion of paper losses on mortgage-backed securities as ``temporary,'' as if the housing bubble is coming back soon. The designation, which is an old Freddie Mac and Fannie Mae trick, meant Citigroup didn't have to include the losses on its income statement or in its regulatory capital.

Damaged Goods

Under the SEC's rules, if a company ``concludes that a material charge for impairment to one or more of its assets'' is required by generally accepted accounting principles, then it must make the necessary disclosure, using a filing known as a Form 8-K.

The exception is if ``the conclusion is made in connection with the preparation, review or audit'' of the company's periodic financial statements. In that case, the company can wait until its next quarterly report to disclose the information.

Citigroup's fourth quarter doesn't end until Dec. 31. The company's finance whizzes don't need to start drafting their year-end balance sheet to know Citigroup has lots of damaged goods. If Citigroup Chief Executive Officer Vikram Pandit hasn't concluded this already, it's because he prefers not to. Same goes for director and senior counselor Robert Rubin, the former Treasury secretary.

When I asked a Citigroup spokeswoman, Shannon Bell, last week why the bank hadn't disclosed any significant impairment charges for this quarter, she replied: ``Citi follows all reporting requirements.'' When I asked again this week, she declined to elaborate. Her statement speaks volumes, nonetheless.

At the Bailoutpalooza, everybody knows the rules: There are no rules. This has to stop somewhere.

(Jonathan Weil is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: Jonathan Weil in New York at jweil6@bloomberg.net

Last Updated: December 4, 2008 00:01 EST