U.S. Agrees to Citigroup Bailout (Guarantees $300 billion in toxic assets)

Wall Street Journal ^

[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.

[ConservativeMan55]

I am in my mid 20’s and we’ll be paying for these “bailouts” for the rest of my life...

[BenLurkin]

[Leisler]

Asia markets down.

[Pining_4_TX]

Thank you, sir, may I have another? I love being robbed to pay for the profligacy of others!

[Lurker]

Watch for Citi stock to close below 5 a share again tomorrow.

The short sellers are going to kill them, and rightfully so.

L

[realdifferent1]

When do we start 'Watering the tree'?

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.

[John W]

“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?

[ElkGroveDan]

Next up, newspaper bailouts. After that we can resurrect the typewriter companies.

[Mad_Tom_Rackham]

For a minute, I thought this was going to cost a lot.

[hercuroc]

MADNESS!

[Proud_USA_Republican]

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.

[Tennessee Nana]

Our troops have to beg for every penny in order to buy ammo and equipment...

[Tennessee Nana]

Alex Guiness, Bridge on the River Kwai

He needs a bailout too...

:)

[PressurePoint]

I paid my taxes.
My taxes are being handed over to Citigroup.
Does this mean my Citibank credit card bills will be comped from here on out?

[Prokopton]

Why don’t we just give a billion dollars to every citizen and be done with it.

[St. Louis Conservative]

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.

[Attention Surplus Disorder]

GREAT news! Hugely bullish! $4 bank needs gov’t bailout in order to prevent implosion. Everybody in!

[umgud]

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).

[kc8ukw]

I want a Congressman to stand up in front of the cameras and find for me in the Constitution where it says the federal government can do something like this. And if he can really show it to me, I'll be satisfied. But we are heading down a dangerous, dangerous path, where the only limit on federal power will be federal ambition.

I suggest we all make some noise to our Congressmen.

[Almondjoy]

Treasury took on only 5 billion.

Well 5 billion is 5 billion.. but it isn’t 300 billion. People need to understand what comes out of their pocket versus what comes out of private companies pocket.

[NinoFan]

Based on Obama’s picks so far, I doubt it. The socialists... oops, I mean, libs, would rather destroy this country with socialized healthcare than use good common sense during these difficult economic times.

[autumnraine]

Give us your poor, your tired, your weak, your hungry...

...your crap loans, your garbage stock, your bankrupt corporations

[dalereed]

They should have let them go under!

Every dollar they print for a stimulus or bail out is stealing from me and the people agreeing to them should be brought up on grand theft charges and put in prison!

[kabar]

Prince Alaweed bin Talel is a major stockholder in Citigroup. I suspect that the Saudis have applied major pressure to make this happen.

[Issaquahking]

That’s it....I’m not paying for anything else. My government is to stupid to let a bad penny go...The inmates have taken over the asylum....

[rickylc]

why would there be changes when rubinites are and will be running the federal show (paulson, benrnancke, geitner, summers)

[madison10]

Great...throw the money down the invisible banking toilet, but don’t bailout real workers. Washington bailing out its own.

[Centurion2000]

200 billions stimulus
700 billion bailout
300 billion for citigroup
WTF is going on here? We the tax payers are going to be buggered and BEGGARED with all this $$ they are throwing out.

Unless they are planning to monetize the debt ... we're all dead meat.

[umgud]

This is insane. Pretty quick you’d think the populace would revolt at their dollars bailing out everybody but them. You and I have to live within our means or face the consequences, but our gov’t keeps giving away our money. My kids and grandkids may never forgive this generation who prematurely bankrupted them.

[OldArmy52]

I lost money too.
How about my bailout?
I want free taxpayer money too!

[rabscuttle385]

The Money, Banking, and Financial Markets Ping List. "Money, not morality, is the principle commerce of civilized nations." —Thomas Jefferson FR Keywords: moneylist, bankinglist, financelist Please tag all relevant threads with the aforementioned keywords. This can be a very high-volume ping list at times. Ping list jointly pinged by rabscuttle385 and TigerLikesRooster. To join the ping list: FReepmail rabscuttle385 with the subject line add  moneylist. (Stop getting pings by sending the subject line drop moneylist.)

[rabscuttle385]

*Ping!*

[Lilpug15]

If there are no taxes left to be paid since we all become broke or jobless and all countries stop investing in us because the value of the dollar becomes worthless and we face Weimer Republic - at what point is the U.S. technically heading here:

[Ernest_at_the_Beach]

Obama in the act already...GM, Ford and Chrysler up next!

[Ernest_at_the_Beach]

Marketwatch:

U.S. agrees to bail out Citigroup: WSJ

*************************EXCERPT****************************

A similar assistance structure was used successfully in the 1990s, with funding from private investors, to rescue Mellon Bank, now called Bank of New York Mellon Corp.

[ConservativeCompendium.net]

So about a trillion and a half dollars later and we have:

Nbr of changes made to ensure this doesn't happen again: 0

Nbr of perp walks: 0

Nbr of congressional hearings: 0

Nbr of times this will happen in the future: Infinite - It works!

Charming ;(

And of course nobody in the Fed govt will have any idea where THIS $300 billion goes either.

Banks are laughing their asses off over this. THey got the feds cowed and the banks are just sitting on all this fortune and investing it in a better opportunity, earning far better earnings than they were this time last year.

[XR7]

So, how much of he Bush bailout/sellout money is left?

[downwdims]

Madness?

[Ernest_at_the_Beach]

PDF File containing the details from the Treasury :

Treasury Department statement

[calcowgirl]

The Money, Banking, and Financial Markets Ping List.

Short name: BOHICA list.

[politicket]

Well 5 billion is 5 billion.. but it isn’t 300 billion. People need to understand what comes out of their pocket versus what comes out of private companies pocket.

The Fed is on the hook for up to $245 billion. Where do you think that money will come from?

The FDIC is on the hook for $10 billion. Where do you think that money will come from?

The U.S. Treasury is on the hook for $5 billion. Where do you think that money will come from?

We are going to end up in Great Depression II.

[downwdims]

Depends on how much the Fed takes on.

If they are using the last of TARP for the 350 bill guarantee then it’s all down the rabbit hole. 350 to recapitalize banks, 150 to back up AIG/European Banks, 350 to back up Citi, plus a little to grease the congressional wheels and BAM! There’s the last round in the current clip.

[rabscuttle385]

Short name: BOHICA list.

Pretty much.

[ConservativeCompendium.net]

Actually, it's $306 billion.

how easy people throw away 6 billion dollars.

Hells bells, I want the govt to guarantee 90% of MY debt!!! :(

[downwdims]

They do. Just to your lenders. They write your stuff off and take a tax break :)

[ConservativeCompendium.net]

Nope. according to the document Earnest posted above, only 5 billion comes from Tarp. The rest comes from FDIC or the Fed will print more worthless dollars for it.

[downwdims]

Treasury=Fed Fed=Treasury

Read up on how Central Banks work. Thanks for playing!

[Gondring]

Not to mention the laws that assigned penalties if they didn’t.

[PressurePoint]

• 1 bottle of the finest champagne - $700
• 1 night with a hooker - $2,000
• Trip to Las Vegas - $12,000
• Vacation house in the Hamptons - $18,000,000
• Bailout from the government – Priceless

There's some things money can't buy.
For everything else, there's Citibank Mastercard.