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U.S. gave up billions in tax money in deal for Citigroup's bailout repayment
Washington Post ^ | 12/15/09 | Binyamin Appelbaum

Posted on 12/15/2009 7:02:14 PM PST by Bokababe

Deal made to recover bailout Firms exempted from rule when U.S. sells its stake

(Excerpt) Read more at washingtonpost.com ...


TOPICS: Breaking News; Business/Economy; Crime/Corruption
KEYWORDS: bailout; citigroup; tarp; taxes
Glad to see that they are so generous with our money! /s
1 posted on 12/15/2009 7:02:14 PM PST by Bokababe
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To: Bokababe; Jet Jaguar; NorwegianViking; ExTexasRedhead; HollyB; FromLori; ...

The list, ping


2 posted on 12/15/2009 7:06:42 PM PST by Nachum (The complete Obama list at www.nachumlist.com)
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To: AdmSmith; Berosus; bigheadfred; Convert from ECUSA; dervish; Ernest_at_the_Beach; Fred Nerks; ...

At the tone, leave a whimper.


3 posted on 12/15/2009 7:34:45 PM PST by SunkenCiv (My Sunday Feeling is that Nothing is easy. Goes for the rest of the week too.)
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To: Bokababe
I've been reading multiple news articles over the last few days and have yet to find any concrete statement on the even larger problem. Earlier this year citigroup split off a 'bad bank' called Citi Holdings. At last acknowledgement the taxpayers were guaranteeing over $300 Billion in toxic assets for Citi Holdings. Just the holding companay and that's what was readily acknowledged. When it's all said and done this 'citi-scam' could cost taxpayers a half a trillion dollars.
4 posted on 12/15/2009 7:42:47 PM PST by allmost
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To: Bokababe
I want my money back.

Photobucket

5 posted on 12/15/2009 7:43:45 PM PST by hercuroc
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To: Nachum

Thats not all you know the $25 Billion they supposedly paid back well not true.

Citi doesn’t have to “pay back” the remaining $25 billion. The government converted $25 billion of preferred stock into Citi common at a little over $3/share for the common (when it was trading at less than half that). The government now intends to sell its Citi shares over the next 6-12 months. It may come to more or less than $25 billion but Citi isn’t on the hook for a shortfall if there is one.

Sweet deal were stuck with their toxic crap and they get huge bonus’s and

http://www.businessinsider.com/even-without-tarp-banks-are-still-heavily-subsized-2009-12


6 posted on 12/15/2009 7:43:49 PM PST by FromLori (FromLori)
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To: potlatch

7 posted on 12/15/2009 7:47:03 PM PST by devolve ( . . . . . . . . . . . width="457" height="600" . . . . . . . . .)
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To: Bokababe

Just look at the timeline of the Citigroup deal,” says one leading Democratic consultant. “Just look at it.

http://www.rollingstone.com/politics/story/31234647/obamas_big_sellout

Much more in that article about citigroup

and yes I know someone will come along and they citigroup and citibank are different if you count being a different division under the same umbrella as different I don’t.

Citibank Top Donor to Obama Inauguration

http://newsmax.com/InsideCover/citibank-obama-donors/2009/01/15/id/327689


8 posted on 12/15/2009 7:58:39 PM PST by FromLori (FromLori)
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To: FromLori
Citibank, et al, own gazillions in credit card debt. They get to keep charging exhorbitant rates and avoiding income taxes.

Hmmm.

I do believe somebody will end up going to jail AFTER the Republicans take over the government.

9 posted on 12/15/2009 8:00:43 PM PST by muawiyah (Git Out The Way)
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To: muawiyah

I hope so back in the 80’s when there was that savings and loan debacle there was prosecutions someone posted an article earlier about that

http://kunstler.com/blog/2009/12/hostage-situation.html


10 posted on 12/15/2009 8:06:16 PM PST by FromLori (FromLori)
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To: Bokababe

Didn’t Obama just say he didn’t become President so that he could bail out the “fat cat bankers” on wall st.?


11 posted on 12/15/2009 8:22:04 PM PST by NotSoModerate
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To: Bokababe
Glad to see that they are so generous with our money! /s

You get it as a matter of principle. There is no such thing as government money. It's OUR money that we put our neighbors in charge of.

There is more to this story than the populist torches and pitchforks story WaPo is reporting. And I'm no fan of either.

12 posted on 12/15/2009 8:57:21 PM PST by Eric Blair 2084 (Beware of the Socialist Government-Academia Grant Junkie-Rich "non-profit"-Liberal Media Complex)
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To: devolve

13 posted on 12/15/2009 9:04:58 PM PST by potlatch (ACTIONS - Speak Louder Than Words)
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To: potlatch; All

check this out

One of the bankers came out and said his meeting was a pr stunt...

“It’s a p.r. stunt,” says an executive at one of the banks that will be getting a dressing-down at the White House meeting. Executives from Goldman Sachs, JPMorgan Chase, Bank of America and Wells Fargo are expected to be among those in attendance.

Read more: http://www.time.com/time/business/article/0,8599,1947411,00.html#ixzz0ZpN1cSLF


14 posted on 12/15/2009 9:44:56 PM PST by FromLori (FromLori)
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To: Bokababe
Joe the Plumber, however, has to be sure to pay all his taxes on time and he gets no tax break.

What are the chances that millions of "Joe the Plumber" types will now start working for cash under the table as much as they can?

15 posted on 12/15/2009 9:53:57 PM PST by ikka
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To: FromLori
The government now intends to sell its Citi shares over the next 6-12 months. It may come to more or less than $25 billion but Citi isn’t on the hook for a shortfall if there is one.

And even if they did get $25B for it, it would remain as part of the TARP/Dem slush fund until they decide what to do with it.

16 posted on 12/15/2009 10:40:58 PM PST by ding_dong_daddy_from_dumas (Joe Wilson said "You lie!" in a room full of 500 politicians. Who was he talking about?)
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To: Eric Blair 2084
There is more to this story than the populist torches and pitchforks story WaPo is reporting.

It's a nasty brew of greed, corruption, fraud, and fascism.

17 posted on 12/15/2009 10:46:23 PM PST by foxfield (Sarah Palin, America's "girl next door".)
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To: ikka

A little off the subject, but this came to mind when I read your post:

I’m seeing a future where doctors are working under the table for cash from patients who can’t afford healthcare, and are afraid of going to jail if they get busted, and the doctors themselves are sick and tired of all the government paperwork and red tape if HCR passes.


18 posted on 12/15/2009 11:31:09 PM PST by LibertyRocks ( http://LibertyRocks.wordpress.com ~ ANTI-OBAMA STUFF : http://cafepress.com/NO_ObamaBiden08)
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To: Eric Blair 2084

You’d be surprised at how many Americans (even those in COLLEGE) don’t even understand that simple fact (that the gov’t produces no money of it’s own and takes from us for everything they fund).

Did anyone actually think we’d see these funds back? I know I was told by a lot here to “trust”, support the bailouts & such, and that we’d get back our money with interest... I wonder where those same folks are now?


19 posted on 12/15/2009 11:34:21 PM PST by LibertyRocks ( http://LibertyRocks.wordpress.com ~ ANTI-OBAMA STUFF : http://cafepress.com/NO_ObamaBiden08)
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To: LibertyRocks

Doctors will be too afraid of getting their license yanked by the AMA to work “under the table”, otherwise we’d see a lot more of that sort of thing in Canada.

But then again..the Canadian health system is only half as bad as Obamascare.


20 posted on 12/15/2009 11:34:23 PM PST by Soothesayer9
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To: Soothesayer9

AMA/State boards


21 posted on 12/15/2009 11:35:27 PM PST by Soothesayer9
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To: SunkenCiv

At the tone, leave a whimper.

Our present War Cry


22 posted on 12/15/2009 11:43:23 PM PST by TomasUSMC ( FIGHT LIKE WW2, FINISH LIKE WW2. FIGHT LIKE NAM, FINISH LIKE NAM)
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To: NotSoModerate
"Didn’t Obama just say he didn’t become President so that he could bail out the “fat cat bankers” on wall st.?"

Yes, he did.

Meanwhile, "IRS hires hundreds for new wealth unit". So, while Obama is actually "bailing out fat cat (Citibank, who contributed to his campaign) bankers", he has simultaneously yelled, "Attack" to the the IRS, on the rest of us.

None of this really surprises me, since years ago I watched Bill Clinton do everything possible to create the most vicious war possible in the Balkans, while publicly calling for "Peace". But this Orwellian political double-speak may come as a real shock to the rest of America.

Just know that "The Barrack Hussein Obama Show" has been many years in the making, geared to exploiting our every hope, dream, and stupid trust in wishful thinking.

23 posted on 12/15/2009 11:54:38 PM PST by Bokababe (Save Christian Kosovo! http://www.savekosovo.org)
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To: Bokababe

it’s ok. the obama will raise taxes on all to give more away. isn’t it all wonderful?? thats why they want the carbon-CON tax.


24 posted on 12/16/2009 12:09:12 AM PST by IGBT (..it's the Carbon-Con. A green slime license to purge you of all your money.)
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To: Eric Blair 2084
There is more to this story than the populist torches and pitchforks story WaPo is reporting. And I'm no fan of either.

You are right, there is. Since it would be silly for the government to tax itself, the pro rata part of Citi that will be owned by the "government" - after the conversion of debt into shares - will not be taxed on its profits, thus "giving up billions in tax money", in WaPo vernacular.

US Forgoes Billions in Tax on Citi - CNBC staff and wire reports, 2009 December 15


25 posted on 12/16/2009 1:29:31 AM PST by CutePuppy (If you don't ask the right questions you may not get the right answers)
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To: CutePuppy; Eric Blair 2084
In addition, there are FASB and IRS change of control (ownership) rules that prevent portions of NOLs (non-operating losses) being realized in M&A transactions, which formerly made companies with large NOLs attractive merger targets for profitable companies, to shelter / offset future profits :

"This rule was designed to stop corporate raiders from using shell losses to evade taxes, and was never intended to address the unprecedented situation where the government owned share in banks."

... under normal IRS rules, a change in control would have sharply reduced the amount the company could shelter from taxes.

26 posted on 12/16/2009 1:39:56 AM PST by CutePuppy (If you don't ask the right questions you may not get the right answers)
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To: Soothesayer9

That’s something I didn’t consider. You’re right of course. The risk to them would be too great...


27 posted on 12/16/2009 4:52:52 AM PST by LibertyRocks ( http://LibertyRocks.wordpress.com ~ ANTI-OBAMA STUFF : http://cafepress.com/NO_ObamaBiden08)
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To: JasonC

Ping


28 posted on 12/16/2009 12:36:36 PM PST by investigateworld (Abortion stops a beating heart)
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To: FromLori

Bump your post, Lori.


29 posted on 12/16/2009 1:13:08 PM PST by potlatch (ACTIONS - Speak Louder Than Words)
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To: NotSoModerate

yes lol even the bankers new that was a pr play

“It’s a p.r. stunt,” says an executive at one of the banks that will be getting a dressing-down at the White House meeting.

Read more: http://www.time.com/time/business/article/0,8599,1947411,00.html#ixzz0ZtAaGyLF

http://www.opensecrets.org/orgs/list.php?order=A

http://www.opensecrets.org/news/2009/07/jpmorgan-ceo-jamie-dimon-donat.html

http://www.nlpc.org/stories/2009/12/07/goldman-sachs-challenged-embrace-global-warming-wake-%E2%80%98climategate%E2%80%99

http://www.businessinsider.com/goldman-sachs-changes-its-status-to-financial-holding-company-2009-8

barack-obama-expands-goldman-sachs-power.html

http://www.ritholtz.com/blog/2009/03/backdoor-bailouts-for-goldman-sachs/

http://www.propublica.org/ion/stimulus/item/stimulus-transparency-watchdogs-keep-contract-details-a-secret-813

http://www.noquarterusa.net/blog/2009/07/02/will-cap-and-trade-be-the-next-bubble/

http://www.salon.com/opinion/greenwald/2009/04/04/summers/

http://www.economicpolicyjournal.com/2009/07/president-obamas-favorite-banker.html

http://www.nytimes.com/2009/07/19/business/19dimon.html

http://www.americanthinker.com/2009/07/will_dems_allow_goldman_to_man.html

http://thehill.com/opinion/columnists/brent-budowsky/72169-obamas-fat-cats


30 posted on 12/16/2009 1:18:50 PM PST by FromLori (FromLori)
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To: NotSoModerate

yes lol even the bankers knew that was a public relations play

“It’s a p.r. stunt,” says an executive at one of the banks that will be getting a dressing-down at the White House meeting.

Read more: http://www.time.com/time/business/article/0,8599,1947411,00.html#ixzz0ZtAaGyLF

http://www.opensecrets.org/orgs/list.php?order=A

http://www.opensecrets.org/news/2009/07/jpmorgan-ceo-jamie-dimon-donat.html

http://www.nlpc.org/stories/2009/12/07/goldman-sachs-challenged-embrace-global-warming-wake-%E2%80%98climategate%E2%80%99

http://www.businessinsider.com/goldman-sachs-changes-its-status-to-financial-holding-company-2009-8

barack-obama-expands-goldman-sachs-power.html

http://www.ritholtz.com/blog/2009/03/backdoor-bailouts-for-goldman-sachs/

http://www.propublica.org/ion/stimulus/item/stimulus-transparency-watchdogs-keep-contract-details-a-secret-813

http://www.noquarterusa.net/blog/2009/07/02/will-cap-and-trade-be-the-next-bubble/

http://www.salon.com/opinion/greenwald/2009/04/04/summers/

http://www.economicpolicyjournal.com/2009/07/president-obamas-favorite-banker.html

http://www.nytimes.com/2009/07/19/business/19dimon.html

http://www.americanthinker.com/2009/07/will_dems_allow_goldman_to_man.html

http://thehill.com/opinion/columnists/brent-budowsky/72169-obamas-fat-cats


31 posted on 12/16/2009 1:19:21 PM PST by FromLori (FromLori)
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To: Bokababe
The rule change enabled Citigroup to repay the government, officials said, arguing that the ruling benefited taxpayers since it would make Citigroup shares more valuable.

And this is an admission by the government that they are using their absolute power to manipulate the stock price of a company. Can you say "Enron"?

32 posted on 12/16/2009 5:30:27 PM PST by Hoodat (For the weapons of our warfare are mighty in God for pulling down strongholds.)
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To: allmost
No, the asset loss agreement was removed along with the TARP repayment. No guarantee from the treasury or Fed to those assets remains or is necessary.

All the supposedly toxic assets have been rising in price since March of 2009 anyway, on the general rally in the bond market. The worst junk on Citi's books went from 30 cents on the dollar at the March lows to 45 recently.

Existing shareholders have been massively diluted by new equity issued at low prices, but that and not solvency is the issue at Citi.

33 posted on 12/17/2009 2:04:14 PM PST by JasonC
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To: CutePuppy
Pretending that non-existent taxes on profits that aren't profits and never were nor ever were going to be, are "lost revenue", is complete lying start to finish. Once again all we have here is more proof that any lie will be believed if it smears anyone connected to finance.

The treasury is going to make money, net, on all of its dealings with Citigroup. It has not lost a dime to date and it isn't going to. Magical mystery accounting of fantasy wealth Citi was supposed to pay the treasury if trees grew to the sky are not "revenue". Investment in Citi stock, preferred or common, are not "losses".

But everyone wants to hate these people, so they make up any lie they can at the precise moment their thesis is collapsing, because the treasury is being repaid by private money.

It is sickening that people pretending to be conservatives are in any way connected with this. It is all transparent lies and slander, start to finish. Ask any of them to state the amount that the US treasury has lost on TARP for banks, or Citi specifically. They can't, they are practicing not even one entry accounting, but pure make believe accounting.

34 posted on 12/17/2009 2:11:18 PM PST by JasonC
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To: LibertyRocks
Did anyone actually think we’d see these funds back? I know I was told by a lot here to “trust”, support the bailouts & such, and that we’d get back our money with interest...

We did get back a big chunk of these funds, with interest. I'll be shocked if we get more than a tiny part of the auto bailout money back.

35 posted on 12/17/2009 2:16:02 PM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: JasonC
And to think that all of this was clearly spelled out in original statement, yet WaPo managed to put a sinister headline on this (and they are not alone in this "art").

What's worse, as you said, it's that so many conservatives can't take a "yes" for an answer, or take credit for the good things that happened that they were responsible for, just because the consequences happen to be on somebody else's "watch". It also denies us credibility when we comment on truly bad things happening that are direct result of liberal programs (such as non-stimulus / Porkulus) because people start to tune out and reject the conclusions due to a priori false commentary.

"It ain't what you don't know that gets you in trouble, it's what you know for sure that just ain't so" - Mark Twain.

Negativity is the rule of the day. That's how they lost the initiative (and re-election) to Clinton who was able to take credit for all the good things happening at the time that he had nothing to do with.

36 posted on 12/17/2009 2:29:57 PM PST by CutePuppy (If you don't ask the right questions you may not get the right answers)
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To: CutePuppy
Correct. They have just become me-too doom-mongers.

Reagan owned faith in freedom and capitalism to always win through in the end. The present crowd isn't fit to clean his shoes...

37 posted on 12/17/2009 2:56:02 PM PST by JasonC
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To: JasonC

Do you have a link for that? Specifying the Citi Holding’s part in all this. They spun it off to keep the ‘Citi’ name clear and above water. I have serious doubts that the CDS’s, MBS’s, and most other ‘toxic’ assets have appreciated that much as well BTW.


38 posted on 12/18/2009 4:28:18 AM PST by allmost
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To: allmost
First on the losses sharing agreement. The original pool of assets was about $300 billion, but it has run off to $250 billion as of its termination (mostly from loans being repaid, especially mortgages in the pools refinanced, and the like). Citi took $8.1 billion in losses on this pool. Under the loss sharing agreement, it was responsible for the first $39.5 billion in losses, from the beginning. The Treasury got around $8 billion in preferred stock for agreeing to cover 90% of anything beyond that (actually split between the UST, the FDIC, and the New York Fed, for the next $5 billion, $10 billion, and remainder, respectively). So none of the government counterparties were going to owe anything unless Citi took a giant bath on this asset pool. It was mostly a confidence building measure, and a rather expensive one for Citi, but useful at the time.

As part of its repayment of TARP, Citi is exiting this loss sharing agreement, in return for retirement of the preferred stock it issued in exchange for it. Citi is booking a $2 billion loss on that part, largely related to repaying the warrants it issued along with the preferred (it was also paying interest etc).

Here is the press release filing at the SEC announcing their exiting the loss sharing agreement -

Edgar filing on Citi repayment and stock offering

Next as to what happened to those asset classes. Here is a link to the standard tracking pool used to measure the performance of subprime mortgage pools, from "Markit", which is a data provider in this area. Note that Citi owned primarily the AAA tranches of its subprime securitizations, with a large position in the 2006-2 vintage in particular. The worst "vintages" of those hit 23 cents on the dollar back in March of 2009, but now trade for 34 cents on the dollar (those are 2007 originations), while the 2006-2 originations are around 45 up from 29.

Markit ABX indices on subprime mortgage pools

39 posted on 12/18/2009 2:47:13 PM PST by JasonC
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To: allmost
As for what was in the covered asset pool, naturally it was not all subprime mortgages. The following is the breakdown as of the end of September.

$81 billion in consumer first mortgages
$50 billion in consumer second mortgages
$11 billion in auto loans
$18 billion other consumer loans
$11 billion in commercial real estate loans
$11 billion in other corporate loans
$9 billion in Alt-A securitizations
$6 billion in SIV securitizations
$2 billion in commercial real estate securitizations
$8 billion "other" securitizations (subprimes, here)
$18 billion in unfunded commitments, 2nd mortgages
$4 billion in unfunded commitments, commercial real estate
$2 billion in unfunded commitments, other consumer
$21 billion in unfunded commitments, other corporate

Understand, "unfunded commitments" means unused portions of lines of credit and possible borrowing on revolving credit facilities and the like, and those are $45 billion of the $250 billion total amount.

The "toxic assets" in the sense most commonly used during the crisis peak, meaning subprime mortgage securitizations and CDOs and such, are all in the $23 billion "securitizations" classes given above, with the highest loss subprime portion already run off or written down to $8 billion by the end of September.

Citi's loan loss reserve (already charged to earnings for anticipated losses) was $36.4 billion as of the same date.

40 posted on 12/18/2009 3:10:44 PM PST by JasonC
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To: JasonC

Thanks for the info. Will read in depth a little later.


41 posted on 12/19/2009 10:16:37 AM PST by allmost
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To: LibertyRocks
Did anyone actually think we’d see these funds back? I know I was told by a lot here to “trust”, support the bailouts & such, and that we’d get back our money with interest... I wonder where those same folks are now?

As I understand it, when they said we'd get our money back they were talking about the government getting our money back. They never said that the greedy taxpayers would ever see a penny of the government's money.

Money once "acquired" by government becomes the government's money (AKA politician's money)to use as a slush fund to buy votes or reward supporters.

42 posted on 12/25/2009 8:49:16 AM PST by oldbrowser (The audacity of incompetence)
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