The global credit card business for Citigroup lost over $900 Million based on selling credit card debt as bonds for pennies on the dollars. Prior to Q3 of 2008, Citi had earned profits on selling its credit card debt to other companies. However, Citigroup found it cheaper to package credit card debt and sell the debt off as bonds versus trying to deploy resources toward recovering the outstanding debt among a segment of its card holders.
Firms like Sherman Financial Group purchase distressed debt from large banks and financial institutions with the intent to recover it based on their own efficient practices. When you combine the profits from Citi's normal credit card operations with the $1.44 Billion loss on the sale of credit card bonds, the net effect for the Quarter was a loss of nearly $1 Billion. Ouch.