Plan to Rescue Citigroup Begins to Emerge

[FreeStateDemocrat]

Source: NY Times

By ERIC DASH and GRETCHEN MORGENSON
Published: November 23, 2008
Federal regulators were considering a new rescue for Citigroup on Sunday, a step that could mark a third leg of the government’s broader efforts to bolster the nation’s 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 government’s 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.


Read more: http://www.nytimes.com/2008/11/24/business/24citibank.html?hp

[tekisui]

1. Here we go.....

This will never end. A precedent was set.

[wordpix]

10. My thoughts exactly. Next corporation, step right up for yer money

[Pale Blue Dot]

2. Citigroup: Government Now Said To Have Cold Feet

Update 2: Sources with knowledge of the deal say government officials are now getting cold feet over the plan to buy the troubled assets from Citigroup.

Situation is still fluid and people close to the company say some sort of a deal will likely be worked out tonight. one other option being considered now is for the government to put money into citigroup.

The problem with buying the assets from citi is political: people close to the deal know that other firms will line up and ask the government to purchase their troubled assets as well knowing that all brokerage stocks got crushed when treasury secretary hank paulson reversed his plan on the tarp to direct capital infusions to the banks and away from buying troubled assets.

Bottom line: this is very fluid and the situation may change again, but as of now government getting cold feet on plan to buy troubled assets, which leaves direct capital infusion on the table.

http://www.cnbc.com/id/27873985

[wordpix]

12. how about COLD FEET because we've got a $10 TRILLION DEFICIT?

The US government ---you and I---simply don't HAVE the money to bail out these waste-and-spend stupids in corporate power, especially when we're $10 trillion in the hole thanks to BushCo's wars and incompetence.

[cloudbase]

3. I must be missing something.

Citigroup reportedly has assets worth between $2 and 3 trillion, with a market cap of around $21 billion.

[Mojorabbit]

17. I wonder how much bad debt

they have on and off their books.

[NC_Nurse]

4. Let me guess, too big to fail?

Sigh.

[Generic Brad]

16. Too big to fail, yes

Like the Roman Empire.

[blue_onyx]

5. They should be required to submit a plan

before they get another cent of government money. If that's what the auto companies have to do before getting any money, that's what Citigroup should have to do before gets a second bailout.

[Hawkeye-X]

6. Fuck Citigroup - it needs to go bankrupt and start from scratch

Eat your own damn bad liabilities, banks!

[Democrats_win]

7. Bushwhacked again. Giving money to rich people? We are fortune's fools.

[Tandalayo_Scheisskopf]

8. I am opening a book:

Who wants to choose a date when the riots start?

[unkachuck]

9. buying up.....

....worthless mortgage paper is GOOD, helping the auto industry re-tool plants and equipment for the future is BAD....only in capitalist America is imaginary paper worth more than real people in real production facilities....

....we need to do better than FDR and scrap this antiquated Rube Goldberg economic structure and build a true Socialist Market Economy....

"...Citigroup, which has already received $25 billion..."....and how much more are going to spend on banks that won't lend?....I'm waiting for dickhead shellbee to champion our cause and tell us why citi has a 'bad economic model' and the way for citi to survive, is bankruptcy....

[wordpix]

11. The same asses who rail against tax $ for poor kids have no problem with CORPORATE WELFARE

:grr:

[ksimons]

13. precisely - and not flinching

it's not just disappointing, it's really disgusting to see folks in places of prominance acting so 2-faced

[saigon68]

14. Disabled veterans get Squat from these fuckers

[Bozita]

15. Does Citigroup have a fleet of executive jets?

Folks in Michigan would like to know.

[Newsjock]

18. Let's turn to The Google for some answers

http://www.usatoday.com/money/companies/management/2005-04-26-corp-jets-cover_x.htm
April 26, 2005

Citigroup's proxy says it spent $309,783 for personal "company transportation" for Chairman Sandy Weill, $108,208 for CEO Chuck Prince and $459,153 for executive committee chair Robert Rubin. Citigroup doesn't break out personal expenses for planes or ground transport.

http://www.business-standard.com/india/storypage.php?autono=333095
Sept. 1, 2008

Citigroup, the world's biggest bank, allows its India-born CEO Vikram Pandit to fly anywhere in its corporate jet on a condition that he would have to pay the company back for any personal use of the aircraft. However, the company has not disclosed any such reimbursement since Pandit's appointment late last year.

http://www.slate.com/id/2158559
Jan. 29, 2007

Citigroup executive Todd Thomson resigned last week amid a cloud of scandal-sniffing from news media and bloggers over Thomson's mysterious relationship with business-news fixture Maria Bartiromo. One particular episode seems to have gotten Thomson in trouble: When traveling from China back to New York, he reportedly bumped Citigroup colleagues from a company jet so he could fly home privately with Bartiromo.

http://www.iowaaflcio.org/vol_07-01.htm
Jan. 11, 2007

Among the happy pensioneers: Citigroup's former top exec, Sandy Weill. He'll be getting a $1 million annual pension and then some. Citigroup is also supplying him with a car and driver, secretarial support, and 10 years worth of free flights on Citigroup corporate jets, plus a $3,846-a-day consulting gig.

[IDemo]

19. BREAKING NEWS: Federal government unveils plan to back $306 billion in Citigroup loans, securities

MSNBC, no details yet..

[RCinBrooklyn]

20. Any company deemed "too big to fail" ought to collapse in dramatic fashion.