Doesn't seem to a definite plan of action; rather, if things go real bad the govt would step in. S&P futures up 10 so maybe Citi has bought some time, so far. November 24, 2008 Plan to Rescue Citigroup Begins to Emerge By ERIC DASH and GRETCHEN MORGENSON Federal regulators were considering a new rescue for Citigroup on Sunday, a step that could mark a third leg of the governmentâs broader efforts to bolster the nationâs financial industry, according to people briefed on the plan. Under the proposal, the government would shoulder losses at Citigroup if those losses exceeded certain levels, according to these people, who spoke on the condition that they not be identified because the plan was still under discussion. If the government should have to take on the bigger losses, it would receive a stake in Citigroup. The banking giant has been brought to its knees by gaping losses on mortgage-related investments. If approved, the plan could serve as a model for other banks, heralding another shift in the governmentâs morphing financial rescue. The Treasury Department initially proposed buying troubled assets from banks but then reversed course and began injecting capital directly into financial institutions. The plan for Citigroup was still under discussion on Sunday afternoon, and it was unclear exactly how the arrangement might work. One question is how Citigroup and the government would determine the level of losses that the bank itself must bear before the government steps in. Another is whether any additional government money for Citigroup, which has already received $25 billion under the initial rescue plan, would come from the $700 billion industry bailout that Congress approved in October or from other sources, like the Federal Reserve or the Federal Deposit Insurance Corporation. Regulators were debating various terms of the arrangement on Sunday, including whether the government would receive preferred stock or warrants, which are instruments that give holders the right to buy stock. Preferred stock would be more beneficial to taxpayers because Citigroup would pay dividends on those shares; warrants would be more attractive to Citigroupâs existing shareholders, since they would not immediately dilute the value of their investments as much as preferred stock. Once the nationâs largest and mightiest financial company, Citigroup lost half its value in the stock market last week as the bank confronted a crisis of confidence. Although Citigroup executives maintain the bank is sound, investors worry that its finances are deteriorating. Citigroup has suffered staggering losses for a year now, and few analysts think the pain is over. Many investors worry that the bank needs additional capital. With more than $2 trillion in assets and operations in more than 100 countries, Citigroup is so large and interconnected that its troubles could spill over into other institutions. Indeed, Citigroup is widely viewed, both in Washington and on Wall Street, as too big to be allowed to fail. Even so, federal regulators want to restore confidence in the company without being seen as bailing out its shareholders. Citigroup executives reached out to Federal Reserve and Treasury last week as they sought to stabilize the companyâs stock, which has plunged 87 percent this year. The plan under discussion is reminiscent of the one that Citigroup and the F.D.I.C. worked out in October to smooth Citigroupâs proposal to buy the Wachovia Corporation. That deal fell through, however, when Wells Fargo swept in with a higher offer. Under that plan, the Citigroup agreed to bear a certain level of Wachoviaâs losses, with the F.D.I.C. absorbing the rest. In exchange, Citigroup agreed to pay the F.D.I.C. in preferred stock. It is also similar to an effort orchestrated by Swiss financial regulators for UBS, another big global bank. Last month, the Swiss central bank and UBS reached an agreement to transfer as much as $60 billion of troubled securities and other assets from UBSâs balance sheet to a separate entity. UBSâs shareholders are scheduled to vote this week on the plan, which would involve the bank putting up $6 billion in equity. The Swiss central bank would control the new entity and loan it $54 billion.