Posted on 11/23/2008 8:43:14 PM PST by mathwhizz
The federal government agreed Sunday to take unprecedented steps to stabilize Citigroup Inc. by moving to guarantee close to $300 billion in troubled assets weighing on the bank's books, according to people familiar with details of the plan.
Treasury has agreed to inject an additional $20 billion in capital into Citigroup under terms of the deal hashed out between the bank, the Treasury Department, the Federal Reserve, and the Federal Deposit Insurance Corp. Treasury officials will charge a higher interest rate for the capital injection -- 8% for the first few years -- than it has charged to dozens of other banks now borrowing money under the government's the $700 billion rescue package approved by Congress last month.
In addition to the capital, Citigroup will have an extremely unusual arrangement in which the government agrees to backstop a roughly $300 billion pool of its assets, containing mortgage-backed securities among other things. Citigroup must absorb the first $37 billion to $40 billion in losses from these assets. If losses extend beyond that level, Treasury will absorb the next $5 billion in losses, followed by the FDIC taking on the next $10 billion in losses. Any losses on these assets beyond that level would be taken by the Fed.
Citigroup would also agree to work to modify -- if possible -- troubled mortgages held in the $300 billion pool, using standards created by the FDIC after the collapse of IndyMac Bank.
The government is not expected to require any management changes, as that was seen as potentially being too destabilizing.
(Excerpt) Read more at online.wsj.com ...
I am in my mid 20’s and we’ll be paying for these “bailouts” for the rest of my life...
Asia markets down.
Thank you, sir, may I have another? I love being robbed to pay for the profligacy of others!
The short sellers are going to kill them, and rightfully so.
L
How much more of this crap are we going to put up with?
Any one who is gainfully employed now is a fool, and will be raped by these people.
“The government is not expected to require any management changes, as that was seen as potentially being too destabilizing.”
Doesn’t something have to be stable before it stands the possibility of being destabilized?
Next up, newspaper bailouts. After that we can resurrect the typewriter companies.
For a minute, I thought this was going to cost a lot.
MADNESS!
Millions of people losing their jobs already are. All because of the greed and stupidity of these financials over leveraging their balance sheets and giving loans to anyone with a pulse.
Our troops have to beg for every penny in order to buy ammo and equipment...
Alex Guiness, Bridge on the River Kwai
He needs a bailout too...
:)
Why don’t we just give a billion dollars to every citizen and be done with it.
I guess the silver lining is that between these massive bailouts and Obama’s new Work’s Progress Administration, we might be spared socialized healthcare. If the federal government was broke before, we are beyond broke now.
GREAT news! Hugely bullish! $4 bank needs gov’t bailout in order to prevent implosion. Everybody in!
Damn, I shoulda bought Citigroup last week. I’d be richer Monday. What the hell, the gov’t has decided buy them for me anyway (w/my tax dollars).
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