Citigroup, U.S. in Talks to Create 'Bad Bank'

Wall Street Journal ^ | 11/23/08 | DAVID ENRICH and CARRICK MOLLENKAMP

[jimbo123]

Citigroup Inc. is nearing agreement with U.S. government officials to create a structure that would house some of the financial giant's risky assets, according to people familiar with the situation.

While the discussions remain fluid and might not result in an agreement, talks were progressing Sunday toward creation of what would essentially be a "bad bank." That structure would help Citigroup cleanse its balance sheet of billions of dollars in potentially toxic assets, these people said.

The bad bank also might absorb assets from Citigroup's off-balance-sheet entities, which hold $1.23 trillion. Some of those assets are tied to mortgages, and investors have worried such assets could cause heavy losses if they land on the company's balance sheet. Citigroup also has about $2 trillion in loans, securities and other assets on its balance sheet as of Sept. 30.

Behind the push is a broad effort to shore up faith in the New York company, which saw its stock price tumble by 60% last week to a 16-year low.

Under the terms being discussed, Citigroup would agree to absorb losses on assets covered by the agreement up to a certain threshold. The federal government would cover losses beyond that level, people familiar with the matter said. One person said the new entity is expected to hold about $50 billion of assets.

[VlPu]

Bad Banks, Good Banks... Oops

[rabscuttle385]

*Ping!*

[rabscuttle385]

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[jd777]

Wait. Bad Bank/ Good Bank. And the common stock just escapes this? Just slice off all the losses and toss them into the US Treasury (under President Hanky Panky Paulson) and then the common stocks keeps on rolling?

Who is in first position to take losses again?

[ikka]

It's ....

BANKS GONE WILD! Get your DVD today!

See them expose their "worthless assets" in front of the camera! Watch as they promiscuously whore themselves out to Congressmen and the Treasury ... for a bucket of your tax money!

etc. etc.

[Vince Ferrer]

Oh, oh! Can I have the bad bank please?

Sincerely,

Taxpayer

[G Larry]

I hear Goldman Sachs is merging with Citigroup......

The new name will be “Sachs in the Citi”......

[ari-freedom]

We're bad...bad to the bone.

[Tarpon]

Bad banks, sure you can have all you want. You got the bad mortgages didn’t you? Want seconds with that crap sandwich?

[Ken H]

It was a BAD bank.

[decimon]

The new name will be “Sachs in the Citi”......

Sach of Citi.

[JudgemAll]

And they said the war in Iraq was too expensive... drop in the bucket by now.

This is hyperinflation.

[ExSES]

Oh, oh! Can I have the bad bank please?

Just wait your turn..., plenty more where this came from!

Shortsellers will just move on to the next bank to attempt to demolish! We've seen this movie a number of times this year and..., next!

[EGPWS]

Citigroup Inc. is nearing agreement with U.S. government officials to create...

I don't have to read any more.

Freedom as we know it is soon to be lost forever.

[oldbrowser]

Citigroup's off-balance-sheet entities

Here we are again. What ever happened to GAAP accounting?

[EGPWS]

It was a BAD bank.

Wish it into the field Ken H, wish it into the field. ; )

[GraniteStateConservative]

you’re good. bravo.

[EGPWS]

BANKS GONE WILD! Get your DVD today!

Order before midnight and we will print the money needed to double your order so don't delay!

[dfwgator]

"And now it's time for "Bad Banks", with your host, Leonard Pinth-Garnell."