…Citigroup (C) revealed that it had off-balance-sheet assets that it could end up sporting in something called Variable Interest Entities (VIEs). VIEs are oh-so-handy separate entities that allow financial firms to keep assets such as ugly subprime-mortgage securities off of their balance sheets.

Citibank and others of its ilk also have forms of corporate debt, such as collateralized debt obligations (CDOs), swaps and other esoteric instruments at their disposal to keep all of their secrets hidden.

So, just how many secrets are we talking for Citibank? One billion? Ha!

Twenty billion? Guess again. One hundred billion? Nope. Three hundred billion? You're getting closer...

On Feb. 22, Citigroup released a report that it lost $22.1 billion from the subprime slime, as well as $320 billion in "significant unconsolidated VIEs." That's $320,000,000,000—an awful lot of zeros.

To put this in perspective Merrill Lynch (MER), which told the financial news it had write offs of nearly $30 billion in subprime trash to date, has $22.6 billion in VIEs, according to a firm called CreditSights.

I can't make this stuff up, nor would I want to. That being said, Merrill Lynch ain't exactly in good shape. I have both C and MER on my short-side buy list.

The laws of banking math are no different from the laws of physics, and the anvil is definitely coming down on these wily coyotes. Money center banks have tremendous amounts of losses they are slowly and sneakily writing down.

These write-downs will not only affect stocks; eventually, they will permanently impair the companies' abilities to generate profits through transactions and loans.

But the news isn't all bad—even as these stocks slide, we can be there to profit in the meantime.

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