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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 ...
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.
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.
Give us your poor, your tired, your weak, your hungry...
...your crap loans, your garbage stock, your bankrupt corporations
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!
Prince Alaweed bin Talel is a major stockholder in Citigroup. I suspect that the Saudis have applied major pressure to make this happen.
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....
why would there be changes when rubinites are and will be running the federal show (paulson, benrnancke, geitner, summers)
Great...throw the money down the invisible banking toilet, but don’t bailout real workers. Washington bailing out its own.
Unless they are planning to monetize the debt ... we're all dead meat.
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.
I lost money too.
How about my bailout?
I want free taxpayer money too!
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Obama in the act already...GM, Ford and Chrysler up next!
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.
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.
So, how much of he Bush bailout/sellout money is left?
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