http://online.wsj.com/article/SB122747680752551447.html?mod=testMod WASHINGTON â 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. Associated Press The giant bank is based in New York City. Citigroup is one of the world's best-known banking brands, with more than 200 million customer accounts in 106 countries. Its plunging stock price threatened to spook customers and imperil the bank. If the government devises a successful rescue plan, it could help bring stability to the entire financial system. If it doesn't, even deeper doubts about the industry's future could spread. The plan would essentially put the government in the position of insuring a slice of Citigroup's balance sheet. etc etc
ty LoL @ The Fed being the last one to absorbing loses. This reminds me of CDOs tranches, the same bullshit that got us into this mess in the first place. At least they are fighting fire with fire.
O so that is good new,s for citi Let hope it can go back to $14 where i had bought it for ehheheheheheeh
Citigroup receives "emergency cash" from the U.S. Treasury U.S. to Back $306 Billion in Citigroup Assets, Regulators Say By Robert Schmidt Enlarge Image/Details Nov. 23 (Bloomberg) -- The U.S. government agreed to protect $306 billion of loans and securities on Citigroup Inc.âs books against losses, as it seeks to shore up investor confidence in the bank. Citigroup will, as a fee for the guarantee, provide preferred shares to the Treasury and Federal Deposit Insurance Corp., the regulators said in a statement. The government will also inject $20 billion into the bank from the Treasuryâs $700 billion Troubled Asset Relief Program. âWe will continue to use all of our resources to preserve the strength of our banking institutions and promote the process of repair and recovery and to manage risks,â the regulators said in the statement. The Federal Reserve, the Treasury and other regulators have been negotiating with Citigroup throughout the weekend. Citigroup lost 60 percent of its market value last week as the companyâs prospects faltered, rattling customers, counterparties and employees. To contact the reporter on this story: Robert Schmidt in Washington at rschmidt5@bloomberg.net. Last Updated: November 23, 2008 23:57 EST
I guess the next question is how much preferreds is the government getting. It's market cap is $20 billion so the shares outstanding could have very well just doubled.
"U.S. to Back $306 Billion in Citigroup Assets, Regulators Say" great news since the sh*tty assets are the root of the problem for C. looks like bagholders like myself will get a chance to dump C on monday.
For immediate release November 23, 2008 Joint Statement by Treasury, Federal Reserve, and the FDIC on Citigroup Washington, DC -- The U.S. government is committed to supporting financial market stability, which is a prerequisite to restoring vigorous economic growth. In support of this commitment, the U.S. government on Sunday entered into an agreement with Citigroup to provide a package of guarantees, liquidity access, and capital. As part of the agreement, Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup's balance sheet. As a fee for this arrangement, Citigroup will issue preferred shares to the Treasury and FDIC. In addition and if necessary, the Federal Reserve stands ready to backstop residual risk in the asset pool through a non-recourse loan. In addition, Treasury will invest $20 billion in Citigroup from the Troubled Asset Relief Program in exchange for preferred stock with an 8% dividend to the Treasury. Citigroup will comply with enhanced executive compensation restrictions and implement the FDIC's mortgage modification program. With these transactions, the U.S. government is taking the actions necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy. We will continue to use all of our resources to preserve the strength of our banking institutions and promote the process of repair and recovery and to manage risks. The following principles guide our efforts: * We will work to support a healthy resumption of credit flows to households and businesses. * We will exercise prudent stewardship of taxpayer resources. * We will carefully circumscribe the involvement of government in the financial sector. * We will bolster the efforts of financial institutions to attract private capital.